Question

Your crazy uncle left you a trust that will pay you $39,000 per year for the next 30 years with the first payment received one year from today. If the appropriate interest rate is 7.2 percent, what is the value of the payments today

Answer 1

$474,386.27

Step-by-step explanation:

For computing the value of the payment today we need to apply the present value formula i.e to be shown in the attachment below:

Given that,

Future value = $0

Rate of interest = 7.2%

NPER = 30 years

PMT = $39,000

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after applying the above formula, the present value is $474,386.27