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3 January, 10:21

Mrs. Crawford will receive $8,700 a year for the next 17 years from her trust. Use Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. If a 13 percent interest rate is applied, what is the current value of the future payments

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  1. 3 January, 10:27
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    The current value of the future payments = $58,543.11

    Explanation:

    The current value of the future payment is the present value (PV) of the of the annuity receipts of $8,700 discounted at the rate of 13% per annum.

    An annuity is a series of periodic cash flows payable or receivable for certain number of years.

    To determine the present value of the annuity, we use the formula below

    PV = A * (1 - (1 + r) ^ (-n)) / r

    r - 13%, n - 17, A = 8,700

    PV = 8,700 * (1 - (1+0.13) ^ (-17) / 0.13)

    PV = 8,700 * 6.7290

    PV = 58,543.11

    The current value of the future payments = $58,543.11
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Home » Business » Mrs. Crawford will receive $8,700 a year for the next 17 years from her trust. Use Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.
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