Homework Answers
This question requires to be calculated with present value method. calculation is given herein below -
Answer is $55,475
| Fees to be paid every year | $12,000 | |||
| No of Years | 6 | |||
| Interest rate is | 8% | |||
| Present value | amount of payments /(1+Interest rate)^no of years | |||
| No of Years | Amount of Payment | Interest rate | Present Value | |
| 1 | $12,000 | 8% | 11,111 | |
| 2 | $12,000 | 8% | 10,288 | |
| 3 | $12,000 | 8% | 9,526 | |
| 4 | $12,000 | 8% | 8,820 | |
| 5 | $12,000 | 8% | 8,167 | |
| 6 | $12,000 | 8% | 7,562 | |
| Total | 55,475 | |||
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