Homework Answers
Answer:
$24,049
Explanation:
We can compute the answer using the concept of present value of Ordinary Annuity.
Given,
Interest rate, i = 10%
Number of periods, n = 8 years
Annuity factor @ 10% for 8 years = 5.33493 (from Annuity table)
:. PVA (Present Value of Ordinary Annuity) =
$6000 * 5.33493
= $32,009.58
= $32,010 (approx.)
Now, we have to calculate the present value of the amount calculated using the PV factor of 3rd year.
Here,
i = 10%
n = 3 years
PV Factor @ year 3 = 0.75131
:. Answer = $32,010 * 0.75131 = $24,049.43 =$24,049
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