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ABC Company sold the rights to use one of their patented processes
that will result in them receiving cash payments of $20,000 at the
end of every six months for each of the next five years and a lump
sum payment of $4,000 at the end of the sixth year.

Calculate the total present value of these payments if the interest
rate is 12% compounded semi-annually.
No credit will be awarded for this question using a means
other than these table factors to answer this question.

Future Value of an Annuity 5% 6% Rate of interest per period in percent Periods 72% 3% 5% 8% 9% 10% 12% 15% 20% 3 3.0150 3.09

Future Value of a Lump-Sum 15% 1.5209 1.7490 2.0114 20% 1.7280 2.0736 2.4883 Cauw Periods 2% 3 1.0151 | 1.0202 1.0253 1.0304

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Answer #1

Present value of these payments :- Semi Cash Present Annual PVF @6% flows $ Value $ Period 1 20,000 0.9434 18,868 2 20,000 0.

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