Question

Marigold Corp. makes an investment today (January 1, 2020). They will receive $72000 every December 31st for the next six years (2020 – 2025). If Marigold wants to earn 9% on the investment, what is the most they should invest on January 1, 2020?

Answer 1

Answer:

$322,986.14

Explanation:

Formula: Present Value = PMT x ((1 - (1 + r) ^ -n ) / r)

PMT = 72,000

r = 9%

n = 6

Therefore Present Value = 72000 x ((1-(1+0.09)^-6)/0.09)

= $322,986.14

Hence, if Marigold Corp. makes an investment today of $322,986.14

They will receive $72000 every December 31st for the next six years, If they want to earn 9% on the investment.