What is the value today of $3,200 per year, at a discount rate of 10 percent, if
ID: 2652407 • Letter: W
Question
What is the value today of $3,200 per year, at a discount rate of 10 percent, if the first payment is received 6 years from today and the last payment is received 20 years from today? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
What is the value today of $3,200 per year, at a discount rate of 10 percent, if the first payment is received 6 years from today and the last payment is received 20 years from today? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Explanation / Answer
You break this problem down into 2 steps. First you calculate the present value of an annuity of $3200/year for 15 years
=(3200*(1-1.1^-15)/(0.1)) = 24339.45
Present Value of a Lump Sum Investment Calculator
calculate the PV of a lump sum of $24339.45 with a 5-year deferral and the final result is $15,112.88
PV = FV /(1+r)^n = 24339.45/(1+.10)^5 =15112.88
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