Question

Investment X offers to pay you $4,700 per year for eight years, whereas Investment Y offers to pay you $6,800 per year for five years. (Use a Financial calculator to arrive at the answers. Round "PV Factor" to 3 decimal places. Round the final answers to 2 decimal places.) 

Calculate the present value for Investment X and Y if the discount rate is 5%.

 Calculate the present value for Investment X and Y if the discount rate is 15%. 

Answer 1

The present value of investment X when the rate is 5%

=PV(rate,nper,pmt)

=PV(5%,8,4700)

=30377.10

The present value of investment X when the rate is 15%

=PV(15%,8,4700)

=21090.41

Where,

rate is rate of return

nper is number of periods

pmt is annuity