The present value of a continuous stream of income can be calculated using the formula:
PV = C / r
Where:
PV = Present Value
C = Annual income amount ($30,000)
r = Interest rate (4%)
Plugging in the values:
PV = $30,000 / 0.04
PV = $750,000
Therefore, the present value of a continuous stream of income over 2 years at a constant rate of $30,000 per year and an interest rate of 4% is $750,000.
Find the present value of a continuous stream of income over 2 years when the rate of income is constant at $30,000 per year and the interest rate is 4%.
1 answer