Hiller Corporation makes an investment today (January 1, 2018). They will receive €30,000 every December 31st for the next six years (2018 - 2023). If Hiller wants to earn 12% on the investment, what is the most they should invest on January 1, 2018?

Question

Quizplus · Accepted Answer

The present value of an annuity formula is used to calculate the maximum investment: PV = PMT × [(1 - (1 + r)^-n) / r]. Here, PMT = €30,000, r = 0.12, and n = 6. Plugging in these values gives the present value as approximately €123,342.

Hiller Corporation Makes an Investment Today (January 1, 2018)