What is the value today of receiving $5,000 at the end of each year for the next 10 years, assuming an interest rate of...
What is the value today of receiving $5,000 at the end of each year for the next 10 years, assuming an interest rate of 12% compounded annually? (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $28,251. $15,529. $50,000. $87,744.
Homework Answers
Answer: $28,251
Explanation
Present Value of Annuity Factor = $5,000 x Present value of annuity factor, 12% for 10 years
= $5,000 x 5.6502
= $28,251
Therefore, value today of receiving $5,000 at the end of each year for the next 10 years, assuming an interest rate of 12% compounded annually = $28,251
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