What is the present value of 1,400 per year annually at the endof years 25...

What is the present value of 1,400 per year annually at the end of years 25 to 43 if the interest rate is 7%

14,082.72

13,759.64

14,469.83

2,852.68

2,594.73

Solutions

Expert Solution

PV of Annuity:

Annuity is series of cash flows that are deposited at regular intervals for specific period of time.

PV of Annuity = Cash Flow * [ 1 - [(1+r)^-n]] /r

r - Int rate per Years

n - No. of Years

PV of Annuity
Particulars	Amount
Cash Flow	$ 1,400.00
Int Rate	7.000%
Periods	18

Periods = 43-25 = 18

PV of Annuity = Cash Flow * [ 1 - [(1+r)^-n]] /r
= $ 1400 * [ 1 - [(1+0.07)^-18]] /0.07
= $ 1400 * [ 1 - [(1.07)^-18]] /0.07
= $ 1400 * [ 1 - [0.2959]] /0.07
= $ 1400 * [0.7041]] /0.07
$ 14,082.72

First option has to be selected

jeff jeffy answered 2 years ago

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