You are going to receive $213,000 in 30 years. What is the difference in present value...

You are going to receive $213,000 in 30 years. What is the difference in present value between using a discount rate of 10 percent versus 5 percent? Use Appendix B as an approximate answer, but calculate your final answer using the formula and financial calculator methods. (Input your answer as a positive value. Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Solutions

Expert Solution

PV = FV / (1 + r)^t

PV @ 10% = $213,000/1.10^30 = $12,206.72

PV @ 5% = $213,000/1.05^30 = $49,283.40

Difference = $49,283.40 - $12,206.72 = $37,076.68

jeff jeffy answered 2 years ago

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