Answer:
Present value of the investment= $61,445.28
Explanation:
Giving the following information:
Annual payment= $5,800
Number of periods= 20 years
Interest rate= 7%
First, we need to calculate the future value of the investment:
FV= {A*[(1+i)^n-1]}/i
A= annual payment
FV= {5,800*[(1.07^20) - 1]} / 0.07
FV= $237,773.86
Now, the present value:
PV= FV / (1 + i)^n
PV= 237,773.86 / (1.07^20)
PV= $61,445.28
