Present Value & Future Value calculation

Calculate the required values and select the correct option.

Solutions

Expert Solution

In this case, we use the formula for Present Value of Annuity

PV(ordinary annuity) = C * [ { 1 - (1+i)-n} / i ]

Here,

C = $ 1,800,000

i = 7% or 0.07

n = 25

Putting the values in the formula, we derive PV = $ 20,976,449.72 or $ 20,976,450

Present Value: $20,976,450.

Hence, Option C is selected.

Soumik Mallick Choudhury answered 1 year ago

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