Npv Question

[craig]

Given the following info., isn't the solution to just multiply $5,000 times 3.993 (Present Value of annuity)? I get an answer of $19,965. If so, I am starting to see it.

The present value of $5,000 to be received each year for five years and earning an 8 percent return (rounded) is
a. $19,965.
b. $20,098.
c. $22,270.
d. $31,080.

 

[jacksonstewart]

Want more knowledge about the accounts for solving the problems..

 

[Ronika]

Hey Craig,

Yes, you would just use the PV of the annuity.
I have illustrated the calculation (without using PV tables )below.


Year Annuity Rate Rate BreakDown Annuity/Rate
1 5000 1.08 1.08 4,629.63
2 5000 1.17 1.08X1.08 4,286.69
3 5000 1.26 1.08X1.08X1.08 3,969.16
4 5000 1.36 1.08X1.08X1.08X1.08 3,675.15
5 5000 1.47 1.08X1.08X1.08X1.08X1.08 3,402.92
19,963.55

 

[joe11]

Person analyse

Quite valuable information! Have an Ideal Christmas to all of you.