Register
Jose has the opportunity to invest in a scheme which will pay $5000 at the end of each of the next 5 years. He must invest $10,000 at the start of the first year and an additional $10,000 at the end of
89.3k views
23 votes
Jose has the opportunity to invest in a scheme which will pay $5000 at the end of each of the next 5 years. He must invest $10,000 at the start of the first year and an additional $10,000 at the end of the first year. What is the present value of this investment if the interest rate is 8%?

User Zea
by
4.8k points

1 Answer

6 votes

Answer: $19963.6

Step-by-step explanation:

The present value of this investment if the interest rate is 8% would be gotten by using the formula below;

PV = PMT/[r × (1+r)^n / (1+r)^n -1]

PV = 5000[8% × (1+8%)^5 / (1+8%)^5-1

PV = 5000[0.08 + 1.08^5 / 1.08^4

PV = 19963.6

Therefore, the present value of the investment is 19963.6

User Ramesh Kotkar
by
4.5k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

4.5m questions

5.7m answers

Other Questions

How can expansionary​ expenditure-based fiscal policy lead to crowding out in the​ economy? A. ​Expenditure-based fiscal policy increases the national​ debt, inducing​ forward-looking households and firms
Stevenson Company purchased equipment for $250,000 on January 1, 2010. The estimated salvage value is $50,000, and the estimated useful life is 5 years. The straight-line method is used for depreciation.
In order to attract younger customers to the Lacoste brand of clothing, CEO Robert Siegel made all of the major decisions in product planning, distribution, and promotion. He asked for no input from his
Andrew doesn’t want to spend a lot of money on student loans, and does not qualify for grants. what is his best option for affording a bachelors degree
The method of appraisal in which the appraiser estimates the replacement cost of the building, deducts depreciation, and adds the value of the site is:________
Link Copied!