Question

An investment will pay $17,000 at the end of each year for eight years and a one-time payment of $170,000 at the end of the eighth 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 6% annual interest rate. (Round your answer to the nearest whole dollar.) Present value of investment

Answer 1

Dear student, only one question is allowed at a time. I am answering the first question

This investment consists of two parks, An annuity of $17,000 each year for 8 years and a lump sum of $170,000

So, the present value will be sum of present value of annuity of $17,000 at 6% for 8 years and present value of $170,000

So, Present value of annuity

= Annuity Payment each year x Annuity factor from PVA table at 6% for 8 years

= $17,000 x 6.20979

= $105,566.43

Present value of $170,000 receivable at the end of 8^th year

= Amount receivable x Present value factor at 6% for 8 years

= $170,000 x 0.62741

= $106,659.7

So, the present value of the investment

= $105,566.43 + $106,659.7

= $212,226.13 or $212,226 ( Rounded off)