Question

Your grandmother will be giving you $10,000 every year for the next five years, the first payment beginning at the end of the first year

A) If you invest these receivables in a bank at 6%, what is the total value at the end of 10 years if you make withdrawals of $3,000 in years 9 and 10?

B) An investor expects to receive $3,000 in year 2, $5,000 in year 5, and $7,000 in year 7. What is the present value of these payments if the interest rate is 8%?

Please also write the Excel formulas.

Answer 1

a. The present value of these receivables is $42,123.64

b. The total value at the end of 10 years is $69,257.02

c. The present value of these payments is $10,059.37

Explanation: