Question

What is the present value of $1,400 a year at a discount rate of 8 percent if the first payment is received 7 years from now and you receive a total of 25 annual payments

Answer 1

Answer:

Present Value = $9,417.69  (Approx)

Explanation:

Given:

Annual payment = $1,400

Total payments = 25

Rate = 8% = 0.08

Computation:

First payment [7 years from now ]

So,

Present Value = $1,400(1/1.08⁶)[1 - (1/1.08)²⁵] / 0.08

Present Value = $1,400[6.72692]

Present Value = $9,417.69  (Approx)

Answer 2

The loan is $1400 at a 8% discount. Therefore, the Present Value is equal to $9,417.69 (Approx).

What is the term Present Value about?

A present value is defined as a current value of future money at a specified rate of return.

Given Information:

• Annual payment = $1,400
• Total payments = 25
• Rate = 8% = 0.08

Solution:

First payment= 7 years from now

Hence,

Present Value = $1,400(1/1.08⁶)[1 - (1/1.08)²⁵] / 0.08

Present Value = $1,400[6.72692]

Present Value = $9,417.69  (Approx)

Learn more about annual payments, refer to the link:

https://brainly.com/question/6238885