Question

An investment will pay $20,500 at the end of the first year, $30,500 at the end of the second year, and $50,500 at the end of the third year. (FV of $1, PV of $1, FVA of $1, and PVA of $1)(Use the appropriate factor(s) from the tables provided.)

Determine the present value of this investment using a 8% annual interest rate. (Round your answer to nearest whole dollar.)

Answer 1

Present Value = 20500/(1+ 0.08)^1 + 30500/(1+ 0.08)^2 + 50500/(1+0.08)^3 = $85219

Or,

Year	Cash flow	PVF@8%	Present value
1	$              20,500	0.9259	$        18980.95
2	$              30,500	0.8573	$        26147.65
3	$              50,500	0.7938	$ 40086.90
	Present value =		$        85216