Find the present value of a payment stream of $100 per year for the first fifteen years and $200 per year for the next five years, given a 12% discount rate.
A)$813
B)$1,402
C)$953
D)$887
E)$712

Question

Quizplus · Accepted Answer

The present value of the first fifteen years is $100 * (1 - (1 + 0.12)^-15) / 0.12 = $813. The present value of the next five years is $200 * (1 - (1 + 0.12)^-5) / 0.12 = $589. The total present value is $813 + $589 = $1,402.

Find the Present Value of a Payment Stream of $100