Answer:
PV= $230,148.09
Explanation:
Giving the following information:
You will receive 27 annual payments of $22,500. The first payment will be received 7 years from today and the interest rate is 5.1 percent.
First, we need to calculate the final value of the payments. We need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual pay= 22,500
n= 27
i= 0.051
FV= {22,500*[(1.051^27)-1]}/ 0.051
FV= $1,248,819.52
Now, we can calculate the present value:
PV= FV/(1+i)^n
PV= 1,248,819.52/ (1.051^34)
PV= $230,148.09
