An investment offers $5,000 per year for 10 years, with the first payment just occurred. If...
An investment offers $5,000 per year for 10 years, with the first payment just occurred. If the required return is 8 percent, what is the value of the investment?
Homework Answers
Investment offers = $5,000
Period = 10 years
First payment right now, means present value of first payment will be $5,000 and the present value of all other payments are
$5,000 * PVAF (8% , 9years) = $5,000 * 6.246887911 = $31,234.44
Value of the Investment = $31,234.44 + $5,000 = $36,234.44
Value of the Investment = $36,234.44
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