1. A payment schedule requires 20 payments of $10,000, the first payment to be made 15...
1. A payment schedule requires 20 payments of $10,000, the first payment to be made 15 years from today. Using a discount rate of 10%, what is the present value of this series of payments? (2 marks)
2. Assume the payment schedule in problem 1 changes as follows: . the payment 17 years from today is waived, and . a payment of $20,000 is made 18 years from today. The other payments are unchanged. Using a discount rate of 10%, what is the present value of this series of payments?
I need the correct answer and really need to know how to solve the problem
Homework Answers
The formula to find the present value =>
Where C is the cash flow, r is the discount rate and t is the time period
1) In the first question the first cash flow start from 15 years from today
=> So in the first 14 years the cashflow will be 0
=>
=> take out 
because it is common numerator and denominator
=> 
Solve this equation to find out the answer
2)
In the second question there will be no cash flow for first 17
years
=> 
=> take out 
because it is common numerator and denominator
=>
=> Solve this equation to find out the answer
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