$5,000 / 0.075 = $66,666.67
If payments are at the end of each year, present value of an annuity formula is
PV = Pmt x (1 - 1 / (1 + i)^n) / i
http://www.tvmschools.com/formula/presen...
Pmt = 5000
i =7.5%
n = ?
You need to know how many years (n) the 5000 is paid for.
If it is only one payment at the end of the first year, the present value is
PV = FV / (1 + i)^n
http://www.tvmschools.com/formula/presen...
Pmt = 5000
i =7.5%
n = 1
PV = 5000 / (1 + 7.5%)^1
PV = 4,651.16
What is the present value of a cash flow of $5000 per year if the annual rate of interest is 7.5%. Assume that interest is compounded annually and round to the nearest cent.
The present value is $ ___
