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3 May, 09:54

What is the present value of $6,000 to be received at the end of each of eight periods, assuming the first payment occurs at the end of the fourth year and an interest rate of 10%?

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  1. 3 May, 10:05
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    Answer: Present value = $7200

    Step-by-step explanation: Given Principal that is the original amount is $6000

    Rate is 10% every fourth year

    But the total period is eight.

    So the interest would be paid 8/4 = 2 times.

    Therefore,

    Simple interest

    = {principal * rate * no of times}/100

    = {$6000*10*2}/100

    Simple interest = $1200

    Present value

    = principal + Simple interest

    = $6000 + $1200

    = $7200.
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