Question

In: Finance

What is the present value of $1,000,000 to be received in 15 years, if the opportunity...

What is the present value of $1,000,000 to be received in 15 years, if the opportunity cost is 3.50% annually?

Solutions

Expert Solution

Compute the present value of sum received after 15 years from now, using the equation as shown below:

Present value = Future value/ (1 + Rate)^Time

                      = $1,000,000/ (1 + 0.035)^15

                      = $1,000,000/ 1.6753488307

                      = $596,890.618643

Hence, the present value of sum received after 15 years from now is $596,890.618643.


Related Solutions

4. What is the present value of $1,000,000 to be received in 35 years if the...
4. What is the present value of $1,000,000 to be received in 35 years if the average rate of interest over the 35 years is 2.5%? Interpret your result. Make sure to show your work.
The present value of $20,000 to be received 25 years from today, assuming an opportunity cost...
The present value of $20,000 to be received 25 years from today, assuming an opportunity cost of 18 percent is
Present Value 6a. What is the present value of $1,000,000, due 25 years from now?   ...
Present Value 6a. What is the present value of $1,000,000, due 25 years from now?    b. What is the present value of a $40,000 ordinary annuity for 25 years? c. What is the present value of a $40,000 perpetuity, if the first payment is 1 year from now? d. What is the present value of a $40,000 perpetuity, if the first payment is now? Using formula or Excel function
What is the present value of $10,000 that will be received in 10 years if the...
What is the present value of $10,000 that will be received in 10 years if the appropriate interest rate is 6%. Do the calculation again with an interest rate of 10% and explain the result.
6a. What is the present value of $1,000,000, due 25 years from now? b. What is...
6a. What is the present value of $1,000,000, due 25 years from now? b. What is the present value of a $40,000 ordinary annuity for 25 years? c. What is the present value of a $40,000 perpetuity, if the first payment is 1 year from now? d. What is the present value of a $40,000 perpetuity, if the first payment is now? 7. You borrow $35,000 today and will make equal annual payments for the next 3 years, starting in...
1. What is the present value of $679.6 to be received 5 years from now if...
1. What is the present value of $679.6 to be received 5 years from now if the discount rate is 20% per year and the discounting period is annual? 2. What present amount is equivalent to $99 received at the end of 5 years, given an opportunity cost of 16%? 3. What amount received at the end of 15 years is equivalent to $96 received at the end of each year for 15 years, given an opportunity cost of 12%?...
1. What is the present value of $160,000 to be received in 9 years from today?...
1. What is the present value of $160,000 to be received in 9 years from today? Assume a per annum discount rate of 9%, compounded annually. (Round to the nearest penny, e.g. 1234.56) Answer: 2. You just purchased a parcel of land for $73,000. To earn a 14% annual rate of return on your investment, how much must you sell the land for in 5 years? Assume annual compounding. (Round to the nearest penny, e.g. 1234.56) Answer: Earnest T needs...
1.What is the present value of $15 if I receive it in 4 years and the...
1.What is the present value of $15 if I receive it in 4 years and the discount rate is 3%? Round your answer to two decimal places. 2. How much cash flow will an investment of $1264 need to generate annually to pay for itself in 6 years? Round your answer to the whole dollar. 3.What is the net present value of $50 each year for the next 7 years if the discount rate is 1%? Round your answer to...
The present value of $20,000 to be received in 5 years at an interest rate of...
The present value of $20,000 to be received in 5 years at an interest rate of 16%, compounded annually, is $9,522.Required:Using a present value table (Table 6-4 and Table 6-5), calculate the present value of $20,000 for each of the following items (parts a—f) using these facts: (Use the appropriate value(s) from the tables provided. Round your PV factors to 4 decimal places and final answers to the nearest whole dollar.)a. Interest is compounded semiannually. b. Interest is compounded quarterly....
What is the Present Value of a cash payment of $38,666 received 14 years from today...
What is the Present Value of a cash payment of $38,666 received 14 years from today which is discounted at a continuously compounded 1.5% rate of interest?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT