Question

Your company will generate 73,000 in annual revenue each year for the next eight years from a new information database. If the appropriate interest rate is 8.5 percent, what is the present value of the savings?

Answer 1

To find the present value of the savings, use the formula for present value of an annuity.

Step-by-step explanation:

To calculate the present value of the savings, we can use the formula for present value of an annuity:

PV = C * (1 - (1 + r)^(-n)) / r

Where:

PV is the present value

C is the annual revenue

• r is the interest rate
• n is the number of years

Plugging in the values, we have PV = 73,000 * (1 - (1 + 0.085)^(-8)) / 0.085 = $479,888.46. Therefore, the present value of the savings is approximately $479,888.46.

Answer 2

$73,000x8.5%=$6,205 for one year
I believe you are looking for either this number or $6,205x8?
$49,640 for 8 years