Question

Stacy will receive equal annual payments of $30,000 with her first payment received in 3 years from today and her last payment received 9 years from today. Find the present value of these payments at the beginning of year 4 (end of year 3) if the interest rate is 7.2%

Answer 1

Answer:

$172,117.5529

Explanation:

In economics and finance, present value, also known as a present discounted value, is the value of an expected income stream determined as of the date of valuation.

Total years = 3 to 9 = 6years

Present value = future cash flow/(1+i)^n

Present value = $30,000 + $30,000/(1.072)^1 + $30,000/(1.072)^2 + $30,000/(1.072)^3 + $30,000/(1.072)^4 + $30,000/(1.072)^5 + $30,000/(1.072)^6

Present value = $172,117.5529