Question

what is the present value of an annuity of $27 received at the beginning of each year for the next six years? The first payment will be received today

Answer 1

Answer:

$129.35

Explanation:

Here is the full question :

What is the present value of an annuity of $27 received at the beginning of each year for the next six  years? The first payment will be received today, and the discount rate is 10%

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

Cash flow each year from year 0 to 5 = $27

I = 10%

PV = $129.35

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute