An investment will pay $20,200 at the end of the first year, $30,200 at the end of the second year, and $50,200 at the end of the third year. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)
Determine the present value of this investment using a 8% annual interest rate. (Round your answer to nearest whole dollar.)
Present value of this investment is $ 84,446
Working:
Year | Cash Flow | Discount factor | Present value |
a | b | c=1.08^-a | d=b*c |
1 | $ 20,200 | 0.925926 | $ 18,704 |
2 | $ 30,200 | 0.857339 | $ 25,892 |
3 | $ 50,200 | 0.793832 | $ 39,850 |
Total | $ 84,446 |
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