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15 November, 23:28

You have a partnership stake in a business that pays you equal payments of $3,000 at the end of each year for the next seven years. If the annual interest rate stays constant at 6%, what is the value of these payments in today's dollars? Round your answer to the nearest whole dollar. $16,747 $17,752 $14,235 $20,934

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  1. 16 November, 00:39
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    The correct answer is A.

    Explanation:

    Giving the following information:

    You have a partnership stake in a business that pays you equal payments of $3,000 at the end of each year for the next seven years. The annual interest rate stays constant at 6%.

    To calculate the present value we need to use the ner present value formula:

    NPV = ∑[Cf / (1+i) ^n]

    Cf = cash flow

    For example:

    Year 1 = 3,000/1.06^1

    Year 3 = 3,000/1.06^3

    Year 6 = 3,000/1.06^6

    NPV = $16,747.14
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