What is the value today of $4,000 per year, at a discount rate of 10 percent, if

Question

What is the value today of $4,000 per year, at a discount rate of 10 percent, if the first payment is received 6 years from today and the last payment is received 20 years from today? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

What is the value today of $4,000 per year, at a discount rate of 10 percent, if the first payment is received 6 years from today and the last payment is received 20 years from today? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

This is a two-step problem:

1) We need to find the PV of the annuity of $4,000 per year at 10% for 15 years (6th year to 20th year both inclusive)

2) We need to use the PV calculated above and change it to FV and find the PV with N = 6 and I/Y = 10%.

1) PV of annuity cash flows = PMT * [{1

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