Your firm is concerned about a financial obligation of $19 million coming due in 8 years....

Your firm is concerned about a financial obligation of $19 million coming due in 8 years. If your firm could earn 6.5% APR on an investment, how much would your firm have to invest today to fund (finance) the future $19 million obligation? (In other words, what is the PV of $19 M due 8 years from now if the interest rate is 6.5%?) Assume annual compounding. Answer in units of millions of dollars and to 2 decimal points. (eg. $19.12 )

Solutions

Expert Solution

PV = FV / (1 + r)^t

PV = $19 million / (1 + 0.065)^8

PV = $11.48 million

jeff jeffy answered 2 years ago

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