Final answer:
The present value of $7,400 per year for 23 years at a discount rate of 7% is calculated using the present value of annuity formula. One can obtain the exact figure only by using a financial calculator or software.
Step-by-step explanation:
To calculate the present value of an annuity (equal cash payments) received in the future, we use the present value of annuity formula. Given a discount rate of 7%, the first payment of $7,400 received three years from today, and the last payment received 25 years from today, the number of payments is 23. The present value of annuity formula is: PV = PMT × [(1 - (1 + r)^{-n}) / r], where PMT is the annual payment, r is the discount rate, and n is the number of payments.
Plugging the values into the formula:
PV = $7,400 × [(1 - (1 + 0.07)^{-23}) / 0.07]
Using a financial calculator or appropriate software to compute the present value, we'll find the value today of this stream of payments.