Question

what is the present value of $3,025 per year, at a discount rate of 9 percent, if the first payment is received 10 years from now and the last payment is received 24 years from today?

Answer 1

The present value of $3,025 per year, at a discount rate of 9 percent, if the first payment is received 10 years from now and the last payment is received 24 years from today is $20,559.78.

Explanation:

To calculate the present value of an annuity, the following formula is used:

`PV = (C / r) x (1 - (1 + r)^-n)`

Where PV is the present value of the annuity. C is the regular payment received. r is the interest rate per period of time.n is the total number of payments to be received.

Let's put the given values in the above formula, we get:

`PV = ($3,025 / 0.09) x (1 - (1 + 0.09)^-15)`

`PV = $33,611.11 x (1 - (1.09)^-15)`

`PV = $20,559.78`

Therefore, the present value of $3,025 per year, at a discount rate of 9 percent, if the first payment is received 10 years from now and the last payment is received 24 years from today is $20,559.78.