Answered

Discover the answers to your questions at Westonci.ca, where experts share their knowledge and insights with you. Explore in-depth answers to your questions from a knowledgeable community of experts across different fields. Experience the ease of finding precise answers to your questions from a knowledgeable community of experts.

An investment offers $6,200 per year for 20 years, with the first payment occurring one year from now. If the required return is 7 percent, what is the value of the investment

Sagot :

abiolataiwo2015

Answer:

$65,682.89

Explanation:

Calculation for what is the value of the investment

Using this formula

PVA = C({1 − [1 / (1 + r)t]} / r)

Let plug in the formula

Where,

C represent Investment offer =$6,200

R represent Required Return=7%

T =20 years

PVA = $6,200{[1 − (1 /( 1+.07*20 years)] / .07

PVA = $6,200{[1 − (1 / 1.07*20 years)] / .07}

PVA = $6,200{[1 − (1 / 2.14)] / .07}

PVA= $65,682.89

Therefore the value of the investment will be $65,682.89

Thank you for choosing our service. We're dedicated to providing the best answers for all your questions. Visit us again. We hope this was helpful. Please come back whenever you need more information or answers to your queries. Westonci.ca is committed to providing accurate answers. Come back soon for more trustworthy information.