Question

Kevin Allen has the opportunity to invest in a project that will provide semi-annual cash payments of
$6,200 over ten years plus an additional $15,000 at the end of the tenth year. How much should he
be willing to invest in the project assuming he wants to earn 9.6% (APR) compounded semi-annually?

N:

I/Y:

PV:

PMT:

FV:

Mode:

Excel Formula:

Answer:

Answer 1

Answer:

N: 20

I/Y: 4.8%   

PV:

PMT: $6,200

FV: $15,000

Mode: END

Excel formula:

PV (rate , nper, pmt, fv, type)

= PV (4.8%, 20, -6200, -15000, 0)

= $84,466.03

Kevin Allen will be willing to invest = $84,466.03