You will receive 28 annual payments of $42,500. The first payment will be received 7 years...

You will receive 28 annual payments of $42,500. The first payment will be received 7 years from today and the interest rate is 7.1 percent. What is the value of the payments today?

Expert Solution

rate positively ..

this is two step problem
step 1 computation of present value at the end of 7 year


We have to use finanical calculator to solve this
put in calculator, set the calculator at beging mode

FV		0
PMT		($42,500)
I		7.10%
N		28

Compute PV		$547,159.27

Step 2 computation of present value today

FV		($547,159.27)
PMT		$0
I		7.10%
N		7

Compute PV		$338,522.44

jeff jeffy answered 2 years ago

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