Question

What is the present value of $1,000 per year, at an annual interest rate of 10%, if the first payment is received 10 years from now and the last payment is received 30 years from now? Round to two decimals no commas ####.##

Thank you!!!

Answer 1

Present value=cash flows*Present value of discounting factor(rate%,time period)

=1000/1.1^10+1000/1.1^11+1000/1.1^12+...............+1000/1.1^30

=1000[1/1.1^10+1/1.1^11+1/1.1^12+...............+1/1.1^30]

=$1000*3.667890651

=$3667.89(Approx).