Question

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What is the present value of $1,200 per year, at a discount rate of 8 percent,...

What is the present value of $1,200 per year, at a discount rate of 8 percent, if the first payment is received 9 years from now and the last payment is received 28 years from now?

Solutions

Expert Solution

8.00%
Year Cash Flow PV factor = 1/ (1+r)^t PV
0 $                                    -   1.000 $              -  
1 $                                    -   0.926 $              -  
2 $                                    -   0.857 $              -  
3 $                                    -   0.794 $              -  
4 $                                    -   0.735 $              -  
5 $                                    -   0.681 $              -  
6 $                                    -   0.630 $              -  
7 $                                    -   0.583 $              -  
8 $                                    -   0.540 $              -  
9 $                        1,200.00 0.500 $     600.30
10 $                        1,200.00 0.463 $     555.83
11 $                        1,200.00 0.429 $     514.66
12 $                        1,200.00 0.397 $     476.54
13 $                        1,200.00 0.368 $     441.24
14 $                        1,200.00 0.340 $     408.55
15 $                        1,200.00 0.315 $     378.29
16 $                        1,200.00 0.292 $     350.27
17 $                        1,200.00 0.270 $     324.32
18 $                        1,200.00 0.250 $     300.30
19 $                        1,200.00 0.232 $     278.05
20 $                        1,200.00 0.215 $     257.46
21 $                        1,200.00 0.199 $     238.39
22 $                        1,200.00 0.184 $     220.73
23 $                        1,200.00 0.170 $     204.38
24 $                        1,200.00 0.158 $     189.24
25 $                        1,200.00 0.146 $     175.22
26 $                        1,200.00 0.135 $     162.24
27 $                        1,200.00 0.125 $     150.22
28 $                        1,200.00 0.116 $     139.10
NPV $ 6,365.33

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