Find the present worth of a series of equal quarterly payments of P 750.00 for 18 years with the first payment starting three months from now. The applied interest rates are: 2% compounded quarterly for the first five years, 2% compounded quarterly for the next five years, and 3% compounded quarterly for the remaining eight years.

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.