You will be receiving $25,000 at the end of each year for the next 20 years....

You will be receiving $25,000 at the end of each year for the next 20 years. If the correct discount rate for such a stream of cash flows is 10% then what is the present value of the cash flows?

Expert Solution

Information provided:

Annuity payments= $25,000

Time= 20 years

Discount rate= 10%

The present value is calculated by entering the below in a financial calculator:

PMT= 25,000

N= 20

I/Y= 10

Press the CPT key and PV to compute the present value.

The value obtained is 212,839.09.

Therefore, the present value is $212,839.09.

In case of any query, kindly comment on the solution.

jeff jeffy answered 10 months ago

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