In: Finance
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.)
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