Time Value of Money Help- Accounting

User Generated

YOQ098

Business Finance

Description

A. How much must be invested on January 1, 2014 to receive $20,000 for ten years if the first payment is to be taken on January 1, 2024? Assume an annual interest rate of 6%?

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Explanation & Answer

NPV of the annuity on 1/1/2024 is 156,034 (annuity due)

This will be the future value in 10 years.

The present value is 87,128. This is what must be invested. 


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