Porter Company has just purchased equipment that requires annual payments of $22,500 to be paid at the end of each of the next 4 years. The appropriate discount rate is 15%. What is the present value of the payments?

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The present value of the payments is $64,237. This can be calculated using the formula for the present value of an annuity:PV = PMT * [1 - (1 + r)^-n] / rwhere:PV is the present valuePMT is the annual paymentr is the discount raten is the number of yearsIn this case, PMT = $22,500, r = 15%, and n = 4. Plugging these values into the formula, we get:PV = $22,500 * [1 - (1 + 0.15)^-4] / 0.15= $22,500 * [1 - 0.5674] / 0.15= $22,500 * 0.4326 / 0.15= $64,237

Porter Company Has Just Purchased Equipment That Requires Annual Payments