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?

Solutions

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 4 months ago

Next > < Previous

Related Solutions

At the end of each of the next 8 years, you plan to put $25,000 in...

At the end of each of the next 8 years, you plan to put $25,000 in the bank. If the annual interest rate is 3%, what is the present value of this planned savings stream? What will the bank balance be at the end of the 8 year period? [Hint: once you know the present value of the savings stream, it's easy to work out the future value]

If you deposit $5,000 at the end of each of the next 20 years into an...

If you deposit $5,000 at the end of each of the next 20 years into an account paying 10.8 percent interest, how much money will you have in the account in 20 years? How much will you have if you make deposits for 40 years? Show Work.

If you deposit $5,900 at the end of each of the next 20 years into an...

If you deposit $5,900 at the end of each of the next 20 years into an account paying 10.8 percent interest, how much money will you have in the account in 20 years?

You plan on saving $12,300 at the end of each of the next 20 years and...

You plan on saving $12,300 at the end of each of the next 20 years and investing your savings at an annual interest rate of 8%. At the end of year 20 you plan on retiring. You plan on leaving your savings in investments yielding an annual rate of 8% and withdrawing from savings a constant amount for the next 30 years commencing at the end of your first year of retirement. How large a withdrawal can you afford to...

45.You plan on saving $12,300 at the end of each of the next 20 years and...

45.You plan on saving $12,300 at the end of each of the next 20 years and investing your savings at an annual interest rate of 8%. At the end of year 20 you plan on retiring. You plan on leaving your savings in investments yielding an annual rate of 8% and withdrawing from savings a constant amount for the next 30 years commencing at the end of your first year of retirement. How large a withdrawal can you afford to...

You decide to save $7,000 at the end of each year for the next 11 years....

You decide to save $7,000 at the end of each year for the next 11 years. If your savings earn an annual interest rate of 4%, how much will you have saved up by the end of 11 years? Round to the nearest cent.

you decide to save $2000 at the end of each year for the next 18 years...

you decide to save $2000 at the end of each year for the next 18 years if your savings earn an annual interest rate of 2% how much will you have saved up by the end of 18 years round to the nearest cent

Suppose you receive $160 at the end of each year for the next three years. a....

Suppose you receive $160 at the end of each year for the next three years. a. If the interest rate is 8%, what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in(a)? c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three...

Suppose you receive $100 at the end of each year for the next three years. a....

Suppose you receive $100 at the end of each year for the next three years. a. If the interest rate is 8% per annum (interest paid annually), what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in part (a)? c. Assume that no withdrawals are made from the savings account until the end of the third year. What is the interest component? d. Compute the...

Suppose you receive $100100 at the end of each year for the next three years. a....

Suppose you receive $100100 at the end of each year for the next three years. a. If the interest rate is 9 %9%, what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in (a)? c. Suppose you deposit the cash flows in a bank account that pays 9 %9% interest per year. What is the balance in the account at the end of each of...

Subjects