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Assume the appropriate discount rate is 8%. You will receive a payment every year for the...

Assume the appropriate discount rate is 8%. You will receive a payment every year for the next 13 years, which will grow at 4% annually. The amount of the first payment will be $6,000. What is the current value of this series of payments?

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Expert Solution

Present value= PMT after year 1/ discount rate- growth rate

PMT after year 1= 6,000$

discount rate=8% i.e 0.08

growth rate=4% i.e 0.04

Present value= 6000/ (0.08-0.04)

=1,50,000$

jeff jeffy answered 2 years ago
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