present value = 40000 + 70000(1.08)^-10
= 40000 + 32423.54
= 72423.54
Are you not familiar with the basic formulas for compound interest?
B) Immediate Bonus= 40,000
Deferred Bonus= 70,000 payable in 10 yrs, relevant interest rate is 8%.. (ignore tax considerations)
Which form of settlement should be accepted
70,000/10=7000 per yr
7000*.08=560
7000-560=6640
6640*10=66400 Is that right?
2 answers
If the present value of a cash flow at an annual rate of interest of 9% is $70000, what is the yearly cash flow? Assume that interest is compounded annually and round to the nearest cent.