Asked by Anonymous
Use the following scenario to answer Discussion Question 2. Jean will receive $8,500 per year for the next 15 years from her trust. If a 7% interest rate is applied, what is the current value of the future payments? Describe how you solved this problem, including which table (for example, present value and future value) was used and why.
Answers
Answered by
Reiny
This is a very typical "present value of an annuity" type of question
PV = Payment[1 - (1+i)-n]/i
= 8500([1 - 1.07^-15)/.07
my calculator gave me $77417.27
(are you still using tables for these kind of questions ?)
PV = Payment[1 - (1+i)-n]/i
= 8500([1 - 1.07^-15)/.07
my calculator gave me $77417.27
(are you still using tables for these kind of questions ?)