What is the present value of $500 per year, at a discount rate of 8.25 percent, if the first payment is received 8 years from now and the last payment is received 18 years from now? Question 4 options: $2,126 $1,944 $1,761 $2,166 $2,025
What is the present value of $500 per year, at a discount rate of 8.25 percent, if the first payment is received 8 years from now and the last payment is received 18 years from now? Question 4 options: $2,126 $1,944 $1,761 $2,166 $2,025
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
What is the present value of $500 per year, at a discount rate of 8.25 percent, if the first payment is received 8 years from now and the last payment is received 18 years from now?
Question 4 options:
|
$2,126
|
|
$1,944
|
|
$1,761
|
|
$2,166
|
|
$2,025
|
Expert Solution
Step 1
Present Value:
- It represents the present or current worth of the expected future cash flows.
- The present value is estimated by discounting the expected future cash flows over the specified period by an appropriate interest rate.
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