Question

An investment offers $6,700 per year for 15 years, with the first payment occurring one year from now. a. If the required return is 6 percent, what is the value of the investment today

Answer 1

Answer: $65070

Explanation:

Based on the information given in the question, the value of the investment today will be:

= amount × pvaf , 1/(1+ rate )^t

= 6700 × pvaf (1/1+6%) ^15

= 6700 × pvaf (1/1.06)^15

= 6700 × 9.712

= $65070

Therefore, the value of the investment today is $65070