Homework Answers
Since $4200 is a one time payment, so it is not an annuity. We will use the simple PV of $1 table to find out the required present value.
Present value = $4200 * PV (7% , 4 years)
where, PV (7%, 4 years) is the Present value factor of $1 at 7% interest rate for 4 years, whose value will be found out from the table.
The value of PV (7%, 4 years) from the table is 0.763.
Putting this value in the above equation, we get,
Present value = $4200 * 0.763
Present value = $3204.6
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