Question

"You found out that now you are going to receive payments of $8,500 for the next 16 years. You will receive these payments at the beginning of each year. The annual interest rate will remain constant at 11%. What is the present value of these payments

Answer 1

Answer:

Present value= $62,722.875≈ $62,723

Explanation:

To calculate present value use this formula

Present value= Yearly payment*{[1-(1+rate)^-period]/rate}

Present value= 8,500*{[1-(1+0.11)^-16]/0.11}

Present value= 8,500* {0.8117/0.11}

Present value= 8500*7.379= $62,722.875