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musickatia [10]
2 years ago
9

What is the present value of $1,200 to be received at the end of each month for 5 years if the discount rate is 6%?

Business
1 answer:
olya-2409 [2.1K]2 years ago
4 0

Answer:

PV= $62,070.67 = $62,071

Explanation:

Giving the following information:

Monthly payment= $1,200

Number of months= 5*12* 60

Discount rate= 0.06/12= 0.005

<u>To calculate the present value, we need to use the following formula:</u>

PV= A*{(1/i) - 1/[i*(1 + i)^n]}

A= monthly payment

PV= 1,200*{(1/0.005) - 1 / [0.005*(1.005^60)]}

PV= $62,070.67

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Please see attachment

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