determine the present value of 330000 to be received at the end of each of four

Question

determine the present value of 330000 to be received at the end of each of four years, using an interest rate of 6%, compounded annually.

2] Ori- " MindTap-Cengage les x x m/takeAssignment/takeAssignm entMain.doinvoker-&take;ÄssignmentSessionLocatorsassignment-take&inprogress-faise; eBook Calculator Print llem Present Value of an Annuity Determine the present value of 5330.000 to be received at the end of each of four years, using an interest rate of 6%, compounded annually, a, a. By successive computations, using the present value of s1 table in Exhibit S. Round to the nearest whole dollar First year Second Year Third Year Fourth Year Total present value b. Bv using the present value of an annuity of S1 table in Exhibit 7, Round to the rearest whole doiar c. Why is the present value of the four s330,000 cash receipts less than the $2,320.000 to be recelvád in the fubure? The present value is less dus to the comnpounding of Int over the 4 yoas Review the time value of mone concept Recall that the tume vale of morsy rencept coqizes thst cath rsceved today is worth more than dhe same smount of cash to be receved in the fut

Explanation / Answer

a year Particular discounting factor @6% cashflow discounted cashflow 1 Year 1 0.9434 $ 3,300,000 $    3,113,207.55 2 Year 2 0.8900 $ 3,300,000 $    2,936,988.25 3 Year 3 0.8396 $ 3,300,000 $    2,770,743.63 4 Year 4 0.7921 $ 3,300,000 $    2,613,909.09 Total Net present value $ 11,434,848.52 b by using annuity factor $ 11,434,848.52

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