Question

What is the present value of ​$3,000 per year for 9 years discounted back to the present at 10 ​percent?

Answer 1

Answer:

$17,277.07

Step-by-step explanation:

Present value of annuity is the present worth of cash flow that is to be received in the future, if future value is known, rate of interest is r and time is n then PV of annuity is

PV of annuity = $\frac{P[1-(1+r)^{-n}]}{r}$

                      = $\frac{3000[1-(1+0.10)^{-9}]}{0.10}$

                      = $\frac{3000[1-(1.10)^{-9}]}{0.10}$

                      = $\frac{3000[1-0.4240976184]}{0.10}$

                      = $\frac{3000(0.5759023816)}{0.10}$

                      = $\frac{1,727.7071448}{0.10}$

                      = 17,277.071448 ≈ $17,277.07