Question

In: Finance

You will receive 27 annual payments of $22,500. The first payment will be received 7 years...

You will receive 27 annual payments of $22,500. The first payment will be received 7 years from today and the interest rate is 5.1 percent. What is the value of the payments today?

$228,447.53

$359,870.96

$249,948.47

$230,148.07

$241,885.62

Solutions

Expert Solution

Calculation of value of the payments today:
Year Cashflow($)(a) [email protected]%(b) Present value(a*b)
1 0 0.951 0.00
2 0 0.905 0.00
3 0 0.861 0.00
4 0 0.820 0.00
5 0 0.780 0.00
6 0 0.742 0.00
7 22500 0.706 15884.13
8 22500 0.672 15113.35
9 22500 0.639 14379.97
10 22500 0.608 13682.18
11 22500 0.579 13018.25
12 22500 0.551 12386.54
13 22500 0.524 11785.48
14 22500 0.498 11213.59
15 22500 0.474 10669.44
16 22500 0.451 10151.71
17 22500 0.429 9659.09
18 22500 0.408 9190.38
19 22500 0.389 8744.42
20 22500 0.370 8320.09
21 22500 0.352 7916.36
22 22500 0.335 7532.22
23 22500 0.319 7166.71
24 22500 0.303 6818.95
25 22500 0.288 6488.06
26 22500 0.274 6173.22
27 22500 0.261 5873.67
28 22500 0.248 5588.64
29 22500 0.236 5317.45
30 22500 0.225 5059.42
31 22500 0.214 4813.91
32 22500 0.204 4580.32
33 22500 0.194 4358.06
Present value 241885.62
Therefore the value of payments today is $241885.62

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