Question

Your company will generate $74,000 in annual revenue each year for the next seven years from a new information database. If the appropriate interest rate is 7.25 percent, what is the present value of the savings

Answer 1

Answer:

$395,354.84

Explanation:

Present value = Payment of yearly revenue * [(1-interest rate)^n )/ Interest rate]

Present value = $74,000 * [(1-1/(1+0.0725)^7 / 0.0725]

Present value = $74,000 * 5.34263299822737

Present value = $395354.8418688254

Present value = $395,354.84

Therefore, the present value is $395,354.84