What is the PV of a 26 year annuity of $1000 that starts in three years?...

Question

Question

What is the PV of a 26 year annuity of $1000 that starts in three years? Assume 7% rate of return. (please show all work)

Answer 1

Answer #1

Calculating Present Value at the end of Year 2,

Using TVM Calculation,

PV = [FV = 0, PMT = 1,000, N = 26, I = 0.07]

PV = $11,825.78

Calculating Value today,

Value = 11,825.78/(1.07)²

Value = $10,329.09

Answer 2

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