How much do you have to deposit now in your savings account that earns a 6% annual interest if you want to withdraw the annual payment series in the figure below?

40 0

Get full Expert solution in seconds

$1.97 ONLY

Unlock Answer

EXPERT ANSWER

Present value = Future value/(1+r)^t
where r=6%, t is the time perid
Year12345
Cash flow10001250150017502000
Present value9431112125913861495
Sum of present values6196
P = 6196
You have to deposit 6196 now in your savings account to be able to withdraw the annual payment series above