Your uncle offers you a stream of payments whose present value,today,is $62,000.There are 15 equal annual payments in the stream.The first payment in the stream occurs seven years from today.If the interest rate is 14%,then what is the value of each payment?
A) $22,156.40
B) $19,435.43
C) $25,258.29
D) $28,794.45
E) $10,094.16

Question

Quizplus · Accepted Answer

Step 1 - Calculate the present value of the payment.
PV = PMT × 11ea7fdb_fc1c_e9c3_a768_a582156a2452_TB2902_11 PMT = PV / 11ea7fdb_fc1d_10d4_a768_f3ad5824107d_TB2902_11 PMT = 62,000 / 11ea7fdb_fc1d_10d5_a768_278cd9532bb4_TB2902_11 = $10,094.16
Using a financial calculator:
N = 15, I = 14, PV = -62,000, FV = 0, cpt PMT = $10,094.16
Step 2 - Calculate the future value of the payment seven years from today.
FV = PV × 11ea7fdb_fc1d_10d6_a768_1f536a727d4c_TB2902_11 FV = 10,094.16 × (1.14 11ea7fdb_fc1d_10d7_a768_45587a87e823_TB2902_11 = $22,156.40

Your Uncle Offers You a Stream of Payments Whose Present