Homework Answers
Present value of $270 received in year 7 at time 3 is = $270 / (1+6%)^(7-3)
= $270 / 1.06^4
= $270 / 1.26247696
= $213.8653
Present value of $270 received in year 8 at time 3 is = $270 / (1+6%)^(8-3)
= $270 / 1.06^5
= $270 / 1.33822558
= $201.7597
Present value of $270 received in year 9 at time 3 is = $270 / (1+6%)^(9-3)
= $270 / 1.06^6
= $270 / 1.41851911226
= $190.3393
Present value of $270 received in year 10 at time 3 is = $270 / (1+6%)^(10-3)
= $270 / 1.06^7
= $270 / 1.50363025899
= $179.5654
Present value of $270 per year between 7 to 10 years = PV of $270 of 7th year at time 3 + PV of $270 of 8th year at time 3 + PV of $270 of 9th year at time 3 + PV of $270 of 10th year at time 3
= $213.8653 + $201.7597 + $190.3393 + $179.5654
= $605.5297
= $605.53
Therefore, Present value of $270 per year between 7 to 10 years = $605.53
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