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(f) Find the present value of an investment that will pay $3,000 at the end of Years 10, 11, and 12. Use a discount rate of 8%.
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(f) Find the present value of an investment that will pay $3,000 at the end of Years 10, 11, and 12. Use a discount rate of 8%.

User Selma
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1 Answer

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18 votes

Answer:

PV= $3,867.67

Step-by-step explanation:

Giving the following information:

Find the present value of an investment that will pay $3,000 at the end of Years 10, 11, and 12. Use a discount rate of 8%.

First, we will determine the future value of the payments:

FV= {A*[(1+i)^n-1]}/i

A= annual payment

FV= {3,000*[(1.08^3) - 1]} / 0.08

FV= $9,732.2

Now, the present value:

PV= FV / (1 + i)^n

PV= 9,732.2 / (1.08^12)

PV= $3,867.67

User Netcyrax
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