Final answer:
To calculate the present value of a six-year, $5,000 per year annuity at a discount rate of 10 percent, use the present value of an annuity formula.
Step-by-step explanation:
To calculate the present value of a six-year, $5,000 per year annuity at a discount rate of 10 percent, we can use the present value of an annuity formula. The formula is:
PV = PMT × [(1 - (1+r)^-n) / r]
where PV is the present value, PMT is the annual payment, r is the discount rate, and n is the number of years.
In this case, PMT = $5,000, r = 0.1, and n = 6. Plugging these values into the formula, we get:
PV = $5,000 × [(1 - (1 + 0.1)^-6) / 0.1]
PV ≈ $20,385.54