Answer:
$31,442
Explanation:
The computation is shown below:
Years Cash flows Discount factor Present value
0 $100,000.00 1 $100,000.00
1 $10,000.00 0.9433962264
2 $10,000.00 0.88999644
3 0.839619283
4 $10,000.00 0.7920936632
5 $10,000.00 0.7472581729
6 $10,000.00 0.7049605404
7 $10,000.00 0.6650571136
8 $10,000.00 0.6274123713
9 $10,000.00 0.5918984635
10 $10,000.00 0.5583947769
Total 7.3600870514
Now the present value is
= $10,000 × 7.3600870514
= $73,600.87
The single payment is
= $100,000 - $73,600.8705
= $26,399.1295
After considering the 6% APR, it is
= $26,399.1295 ÷ 0.839619283
= $31,441.72
The discount factor should be computed below
= 1 ÷ (1 + rate) ^ years
where,
rate is 6%
Year = 0,1,2,3,4 and so on
