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What is the present value of an annuity of $6,000 per year, with the first cash flow received three years from today and the last one received 25 years from today? Use a discount rate of 7 percent.

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TomShelby

Answer:

The present value will be of 85,714.29 dollars

Explanation:

We write the formula for the annuity and then, we place the values for our case:

[tex]C \times \frac{1-(1+r)^{-time} }{rate} = PV\\[/tex]

C 6,000.00

time 2500

rate 0.07

[tex]6000 \times \frac{1-(1+0.07)^{-2500} }{0.07} = PV\\[/tex]

PV $85,714.2857

The present value will be of 85,714.29 dollars

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