Ask Question
21 December, 13:28

An investment offers $8,600 per year for 17 years, with the first payment occurring one year from now. Assume the required return is 9 percent. What is the value of the investment today

+4
Answers (1)
  1. 21 December, 16:24
    0
    Answer: $1,986.14

    Explanation: in order to calculate this, we will use the discounting formula and calculate the present value (PV) of the money.

    PV = C / (1 + r) ^n

    Where:

    PV = Present Value = ?

    C = value of money in the future = $8,600

    r = interest rate = 9% or 0.09

    n = number of years = 17

    PV = 8,600 / (1 + 0.09) ^17

    PV = 8,600 / (1.09) ^17

    PV = 8,600/4.33

    PV = 1,986.14

    Therefore the present value is $1,986.14
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “An investment offers $8,600 per year for 17 years, with the first payment occurring one year from now. Assume the required return is 9 ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers