The present value is the current value of a future sum of money or cash flows given a specified rate of return.
Future cash flows are discounted at the discount rate.
Following is the formula of calculation of present value (PV) :
Present Value (PV) = Future value*cummulative PV factor
:. Cummulative PV factor @ 6% =1/(1+Rate)Numer of periods
=1/(1+.06)29
= 13.5907
Here the Installment of $1 million is paid at the beginning and the remaining amount is paid in 29 annual equal installments.
:.The value of lumpsum payment would be = $1million + ($1million*13.5907)
= $ 14.5907million
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