Answered

Looking for reliable answers? Westonci.ca is the ultimate Q&A platform where experts share their knowledge on various topics. Get the answers you need quickly and accurately from a dedicated community of experts on our Q&A platform. Get immediate and reliable solutions to your questions from a community of experienced professionals on our platform.

An investment offers $5,700 per year, with the first payment occurring one year from now. The required return is 5 percent. a. What would the value be today if the payments occurred for 10 years

Sagot :

Cricetus

Answer:

The correct answer is "$44,013.89".

Explanation:

Given:

Investment per year,

= $5,700

Required return,

= 5%

As we know,

⇒ [tex]Present \ value=Investment \ per \ year\times Annuity \ factor[/tex]

Or,

⇒ [tex]Annuity \ factor=\frac{1-[\frac{1}{(1+k)}]^n }{k}[/tex]

then,

The present value of 10 annual payment will be:

= [tex]5700\times \frac{1-[\frac{1}{(1+.05)}]^{10} }{.05}[/tex]

= [tex]44013.89[/tex] ($)

Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. Thank you for your visit. We're dedicated to helping you find the information you need, whenever you need it. We're here to help at Westonci.ca. Keep visiting for the best answers to your questions.