Question

You increase your collingwood rental property monthly income 10 $1550.00 due at the beginning of every month. what is the cash value of the property if money is worth 7.32% compounded monthly?

a. 345,163.99
b. 255,648.36
c. 241322.48
d. 242783.48
e. 275,222.00
f. 899,533
g. 400,781.00

Answer 1

To find the cash value of the property, we can use the formula for present value of an ordinary annuity.

Step-by-step explanation:

To find the cash value of the property, we need to calculate the present value of the income stream using the formula for present value of an ordinary annuity:

PV = PMT × [(1 - (1 + r)^(-n)) / r]

Where PV is the present value, PMT is the monthly income, r is the interest rate per period (in this case 7.32% compounded monthly), and n is the number of periods (in this case 10 years).

Substituting the values into the formula, we get:

PV = $1550 × [(1 - (1 + 0.0732/12)^(-12*10)) / (0.0732/12)]

Solving this equation, we find that the cash value of the property is approximately $242,783.48. Therefore, the correct answer is (d) 242,783.48.