Charles has to pay $133 per year for the next 16 years. If the appropriate discount...
Charles has to pay $133 per year for the next 16 years. If the appropriate discount rate is 0.135, what would it cost today to settle his debt?
Homework Answers
Information provided:
Yearly payment= $133
Time= 16 years
Discount rate= 0.135*100= 13.50%
The question is solved by computing the present value.
Enter the below in a financial calculator to compute the present value:
PMT= 133
N= 16
I/Y= 13.50
Press the CPT key and PV to compute the present value.
The value obtained is 855.2927.
Therefore, it will cost Charles $855.29 to settle his debts today.
In case of any query, kindly comment on the solution
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