Question

What is the value today of a money machine that will pay $4,705.00 per year for 24.00 years? Assume the first payment is made 2.00 years from today and the interest rate is 11.00%.

Answer format: Currency: Round to: 2 decimal places.

Answer 1

Present value=Cash flows*Present value of discounting factor(rate%,time period)

=4,705/1.11^2+4,705/1.11^3+4,705/1.11^4+4,705/1.11^5+4,705/1.11^6+4,705/1.11^7+4,705/1.11^8+4,705/1.11^9+4,705/1.11^10+4,705/1.11^11+4,705/1.11^12+4,705/1.11^13+4,705/1.11^14+4,705/1.11^15+4,705/1.11^16+4,705/1.11^17+4,705/1.11^18+4,705/1.11^19+4,705/1.11^20+4,705/1.11^21+4,705/1.11^22+4,705/1.11^23+4,705/1.11^24+4,705/1.11^25

which is equal to

=$35385.57(Approx)