Question

How much must be invested today in order to generste

afive-year annunity of 41,000 per year, with the first payment
oneyear from today, at an interest rate of 12%?

Answer 1

$147,796.80

Explanation:

In this question, we have to find out the present value which is shown below:

The computation of the present value is shown below:

= Annual payment × PVIFA for 5 years at 12%

= $41,000 × 3.6048

= $147,796.80

Refer to the PVIFA table

We simply multiply the annual payment with the PVIFA in order to get the exact amount.

The present value comes after taking into account the discount rate for the amount of periods given in the question