Answer:
Present value of investment X=$29,247.28
Present value of investment Y=$25,695.42
Step-by-step explanation:
Since the investment X is paying the $4,300 per year for the period of the 9 years, therefore, the present value of the cash flows pertaining to the investment X shall be determined through present value of annuity formula as follows:
Present value of investment X=R[1-(1+i)^-n/i}
Where
R=amount that investment X is giving per year=$4,300
i= Interest rate per year=6%
n=number of years=9
Present value of investment X=$4,300[1-(1+6%)^-9/6%}=$29,247.28
Since the investment Y is paying the $6,100 per year for the period of the 5 years, therefore, the present value of the cash flows pertaining to the investment Y shall be determined through present value of annuity formula as follows:
Present value of investment Y=R[1-(1+i)^-n/i}
Where
R=amount that investment Y is giving per year=$6,100
i= Interest rate per year=6%
n=number of years=5
Present value of investment Y=$6,100[1-(1+6%)^-5/6%}=$25,695.42