Question

An investment will pay $20,200 at the end of the first year, $30,200 at the end of the second year, and $50,200 at the end of the third year. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

Determine the present value of this investment using a 8% annual interest rate. (Round your answer to nearest whole dollar.)

Answer 1

Present value of this investment is $ 84,446

Working:

Year	Cash Flow	Discount factor	Present value
a	b	c=1.08^-a	d=b*c
1	$       20,200	0.925926	$       18,704
2	$       30,200	0.857339	$       25,892
3	$       50,200	0.793832	$       39,850
Total			$       84,446