An investment offers $8,600 per year for 17 years, with the first payment occurring one year from now. Assume the required return is 9 percent. What is the value of the investment today

Answer: $1,986.14

Explanation: in order to calculate this, we will use the discounting formula and calculate the present value (PV) of the money.

PV = C / (1 + r) ^n

Where:

PV = Present Value = ?

C = value of money in the future = $8,600

r = interest rate = 9% or 0.09

n = number of years = 17

PV = 8,600 / (1 + 0.09) ^17

PV = 8,600 / (1.09) ^17

PV = 8,600/4.33

PV = 1,986.14

Therefore the present value is $1,986.14