Question

An investment will pay $15,000 at the end of each year for eight years and a one-time payment of $150,000 at the end of the eighth year. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) Determine the present value of this investment using a 7% annual interest rate. (Round your answer to the nearest whole dollar.)

Answer 1

Answer:

Total investment PV = $176,865

Explanation:

a) Data and Calculations:

PV (Present Value) $89,565

N (Number of Periods) 8.000

I/Y (Interest Rate) 7.000%

PMT (Periodic Receipts) $15,000.00

b) Calculation of Present value of $15,000 with the annuity factor of 5.971 (7% interest for 8 years):

Present value of $15,000 * 5.971

= $89,565

c) Calculation of Present value of $150,000 at the end of 8 years at 7% interest:

Present value of $150,000 * 0.582 = $87,300

d) Total present value of the investment:

Annuity Present value = $89,565

Present value of lump sum = $87,300

Total investment PV = $176,865

Answer 2

Investment is referred to as the process in which the person invests in any of the assets with the intention or the goal of generating income from the invested assets. It is the appreciation of the value of assets over a period of time.  

The Present Value of the investment is = $176,865

a) Data and Calculations:

PV (Present Value) $89,565

N (Number of Periods) 8.000

I/Y (Interest Rate) 7.000%

PMT (Periodic Receipts) $15,000.00

b) Calculation of Present Value of $15,000 with the annuity factor of 5.971 (7% interest for 8 years):

Present value of $\ 15,000 \times 5.971$

= $89,565

c) Calculation of Present Value of $150,000 at the end of 8 years at 7% interest:

Present value of $\ 150,000 \times0.582 = \ 87,300$

d) Total present value of the investment:

Annuity Present value = $89,565

Present value of lump sum = $87,300

Total investment PV = $176,865

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https://brainly.com/question/15304751