Ask Question
BusinessBusiness
20 October, 03:55

An investment offers $6,800 per year, with the first payment occurring one year from now. The required return is 7 percent. a. What would the value be today if the payments occurred for 20 years

+4
Answers (1)
  1. 20 October, 07:44
    0
    The Today's value of payment occurred for 20 years is $72,039.

    Explanation:

    Payment of fixed amount for a fixed period of time is called annuity. Present value of annuity will be calculated as follow

    PV of annuity = P x [ (1 - (1 + r) ^-n) / r ]

    According to given data

    P = monthly payment = $6,800 every year

    r = interest rate = 7%

    n = number of period = 20 years = 20 periods

    PV of annuity = $6,800 x [ (1 - (1 + 0.07) ^-20) / 0.07 ]

    PV of annuity = $72,039.30
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “An investment offers $6,800 per year, with the first payment occurring one year from now. The required return is 7 percent. a. What would ...” 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
You Might be Interested in
Select the items that describe what most likely happens when the Federal Reserve increases the money supply (and people are confident in the economy). Interest rates rise. Businesses borrow more money. Consumption increases. Interest rates fall.
Answers (1)
The static budget, at the beginning of the month, for Vintage Wine Company follows: Static budget: Sales volume: 2000 units; Sales price: $50.00 per unit Variable costs: $13.
Answers (1)
There are several ways to file pending insurance claims. what is the best way to file so that timely follow-up can be made?
Answers (1)
Consider the following cash flow of company profits. A company earns $3600 in years 1, 2, & 3, from years 4 through 7 the profits increase by $500 annually.
Answers (1)
The Present Times Newspaper Company showed a $14,000 liability in its 2020 balance sheet for subscription revenue received in advance.
Answers (1)
New Questions in Business
The main function of the Federal Reserve System is to: A. Control the money supply B. Set reserve requirements of banks C. Clear checks from member banks D. Serve as the fiscal agent for the Federal government
Answers (1)
Parole violators account for more than half of prison admissions in many states. a. True b. False
Answers (1)
What is the best way to judge the cooking and holding temperatures of food?
Answers (1)
Robinson Company has 6,000 shares of 2%, $150 par, cumulative preferred stock outstanding. Robinson did not pay dividends during 2015, 2016, or 2017, but had met its preferred dividend requirements in all prior years.
Answers (1)
A business-level strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage in specific product markets. (A) True (B) False
Answers (1)
Home » Business » An investment offers $6,800 per year, with the first payment occurring one year from now. The required return is 7 percent. a. What would the value be today if the payments occurred for 20 years
Sign Up Forgot Password?