Asked Nov 17, 2019

Calculating Annuity Present Value An investment offers $4.600 per year for 15 years. with the first payment occurring one year from now. If the required return is 8 percent. what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever?



Expert Answer

Step 1

Calculation of Value of Investment:

The value of investment is $39,373.60.

The value of investment at 40 years is $54,853.22.

The value of investment at 75 years is $57,320.99.

The value of investment forever is $57,500.00.

Excel Spreadsheet:


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А В 1 Investment Amount 2 Required Return $4,600 8% 3 Number of Years 15 $39,373.60 5 Value of Investment at 40 Years $54,853.22 6 Value of Investment at 75 Years $57,320.99 Value of Investment Forever $57,500.00 4 Value of Investment 7


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