In: Finance
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
$241,885.62
Calculation of value of the payments today: | ||||
Year | Cashflow($)(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 |