What is the present value of receiving $1,950 a year for 30 years if you expect...

Question

Question

What is the present value of receiving $1,950 a year for 30 years if you expect a rate of return of 6% a year?

Answer 1

Answer #1

Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

=1950[1-(1.06)^-30]/0.06

=1950*13.7648312

=$26841.42(Approx).

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Answer 2

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