Sherwin Williams will receive $19,850 a year for the next 16 years as a result o
ID: 2616559 • Letter: S
Question
Sherwin Williams will receive $19,850 a year for the next 16 years as a result of a picture he has painted. Use Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.
What is the present value of these payments if the discount rate is 7 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
a.What is the present value of these payments if the discount rate is 7 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Explanation / Answer
Present value of annuity = annuity * [ 1 - 1 / ( 1 + R)n]] / r
Present value of annuity = 19,850 * [ 1 - 1 / ( 1 + 0.07)16]] / 0.07
Present value of annuity = 19,850 * 9.446649
Present value of annuity = $187,515.97
You can also get this using a financial calculator
Keys to use: PMT = 19,850, N = 16, I/Y = 7, CPT PV
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