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Suppose that 5 years from now you will receive $10,000 at the end of every year...

Suppose that 5 years from now you will receive $10,000 at the end of every year for 5 years. What is the present value of this annuity if the opportunity cost rate is 5%?

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Answer #1
The discounted value of the 5 year annuity at t4 = 10000*(1.05^5-1)/(0.05*1.05^5) = $       43,294.77
PV of the annuity at t0 = 43294.77/1.05^4 = $       35,618.71
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