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26 December, 13:52

Your company will generate $47,000 in annual revenue each year for the next seven years from a new information database. If the appropriate interest rate is 7.1 percent, what is the present value of the savings?

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  1. 26 December, 14:02
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    The answer is $252415.91

    Explanation:

    Solution

    Now

    A step bu step solution is provided below in showing the present value of the savings

    Given that:

    Year Annual Revenues Calculations Present value

    1 $47000 $47000 / (1.071) ^1 $43884.22

    2 $47000 $47000 / (1.071) ^2 $40975

    3 $47000 $47000 / (1.071) ^3 $38258.63

    4 $47000 $47000 / (1.071) ^4 $35722.35

    5 $47000 $47000 / (1.071) ^5 $33354.2

    6 $47000 $47000 / (1.071) ^6 $31143.04

    7 $47000 $47000 / (1.071) ^7 $29078.47

    Total present value $252415.91

    Hence the current or present value of the savings is $252415.91
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