Given that the interest rate is 10% per annum,what is the present value of an investment that has 5 equal payments of $50,000 each year for 5 years,starting today?
A)$250,000
B)$25,000
C)$208,493.27
D)$158,493.27
E)$ 178,493.27

Question

Quizplus · Accepted Answer

To find the present value of the investment, we need to discount each payment back to the present time. We can use the formula for the present value of an annuity:

PV = PMT x [1 - (1 + r)^(-n)] / r

Where:
PMT = Payment of $50,000
r = Interest rate of 10%
n = Number of payments, which is 5

Plugging in the numbers, we get:

PV = $50,000 x [1 - (1 + 0.1)^(-5)] / 0.1 = $208,493.27

Therefore, the present value of the investment is $208,493.27.

Given That the Interest Rate Is 10% Per Annum,what Is