Question

From the sale of your family property, you will receive a down payment of $15,000 today and then yearly payments of $15,000 for the next 14 years. If the discount rate is 7% compute the present value of your future payments

Answer 1

$131,182.029

Step-by-step explanation:

The computation of the present value of the future payment is shown below:

As we know that

Present Value of Future Payments = Payment made × PVAF factor at 7% for 14 years

where,

Payment made is $15,000

And, the PVIFA factor is 8.7455

Now placing these values to the above formula

So, the present value of the future payment is

= $15,000 × 8.7455

= $131,182.029

Refer to the PVIFA table