Question

What is the present value of $2,000 paid at the end of each of the next 54 years if the interest rate is 3% per year? The present value is $ (Round to the nearest dollar.)

Answer 1

To calculate the present value of $2,000 paid at the end of each of the next 54 years with an interest rate of 3% per year, we can use the formula for the present value of an annuity. The formula is:

PV =
`C × [(1 - (1 + r)^(-n)) / r]`

where PV is the present value, C is the cash flow per period, r is the interest rate, and n is the number of periods.

Plugging in the values, we have:

PV = $
`2,000 × [(1 - (1 + 0.03)^(-54)) / 0.03]`

Simplifying this equation, we get:

PV ≈ $71,124

So, the present value of $2,000 paid at the end of each of the next 54 years, with an interest rate of 3% per year, is approximately $71,124. (Rounded to the nearest dollar).