Kelly Greene has a contract in which she will receive the following payments for
ID: 2704125 • Letter: K
Question
Kelly Greene has a contract in which she will receive the following payments for the next five years: $4,000, $5,000, $6,000, $7,000 and $8,000. She will then receive an annuity of $10,000 a year from the end of the 6th through the end of the 15th year. The appropriate discount rate is 15 percent.
What is the present value of all future payments? Use Appendix B and Appendix D. (Round "PV Factor" to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.)
Kelly Greene has a contract in which she will receive the following payments for the next five years: $4,000, $5,000, $6,000, $7,000 and $8,000. She will then receive an annuity of $10,000 a year from the end of the 6th through the end of the 15th year. The appropriate discount rate is 15 percent.
Kelly Greene has a contract in which she will receive the following payments for the next five years: $4,000, $5,000, $6,000, $7,000 and $8,000. She will then receive an annuity of $10,000 a year from the end of the 6th through the end of the 15th year. The appropriate discount rate is 15 percent. What is the present value of all future payments? Use Appendix B and Appendix D. (Round "PV Factor" to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.) If she is offered $41,000 to cancel the contract, should she do it?Explanation / Answer
Hi,
Please find the answer as follows:
Part A:
Present Value = 4000/(1+.15)^1 + 5000/(1+.15)^2 + 6000/(1+.15)^3 + 7000/(1+.15)^4 + 8000/(1+.15)^5 + 10000/(1+.15)^6 + 10000/(1+.15)^7 + 10000/(1+.15)^8 + 10000/(1+.15)^9 + 10000/(1+.15)^10 + 10000/(1+.15)^11+ 10000/(1+.15)^12 + 10000/(1+.15)^13 + 10000/(1+.15)^14 + 10000/(1+.15)^15 = 44135.91 or 44136
Answer is 44136
Part B:
No.
Thanks.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.