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Assume the appropriate discount rate is 7%. If the present value of this series of payments is $20,000, what must be the amount of each payment?

Today, you begin to receive payments of equal amounts at the beginning of each year for 6 years (including the payment you receive today). Assume the appropriate discount rate is 7%. If the present value of this series of payments is $20,000, what must be the amount of each payment?

Solutions

Expert Solution

Assume annual receipts as X, use PVAF (r%, n-1 years)

don't forget to take present value of year 1 as 1 since payments are received at beginning.

ans. is 3921.569(see the attached image below)

jeff jeffy answered 2 years ago
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