Question

What is the present value of $2,425 per year, at a discount rate of 7 percent, if the first payment is received 10 years from now and the last payment is received 25 years from now?

Answer 1

4770.34 and 13161.52

Step-by-step explanation:

Below is the calculation:

Given the present value = $2425

Discount rate or interest rate = 7%

Future value after 10 years = present value (1 + r)^n

Future value after 10 years = 2425 (1 + 7%)^10 = 4770.34

Future value after 25 years = 2425 (1 + 7%)^25 = 13161.52

Therefore, the first payment after 10 year will be 4770.34 and 13161.52 is after 25 years.