Sherwin Williams will receive $20,250 a year for the next 18 years as a result o
ID: 2714405 • Letter: S
Question
Sherwin Williams will receive $20,250 a year for the next 18 years as a result of a picture he has painted. Use Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.
What is the present value of these payments if the discount rate is 8 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
What is the present value of these payments if the discount rate is 8 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Explanation / Answer
No, because his NPV is greater than 171000.
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24 Dec-25 Dec-26 Dec-27 Dec-28 Dec-29 Dec-30 Dec-31 Dec-32 Dec-33 Cash flow 0 20250 20250 20250 20250 20250 20250 20250 20250 20250 20250 20250 20250 20250 20250 20250 20250 20250 20250 Discount rate % 8.0% present value of cashflows 0 18750.0 17361.1 16075.1 14884.4 13781.8 12760.9 11815.7 10940.4 10130.0 9379.7 8684.9 8041.6 7445.9 6894.3 6383.6 5910.8 5472.9 5067.5 NPV 189780.71Related Questions
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