The present sum needed to provide for an annual withdrawal of $5,000 for 15 years beginning 5 years from now at an interest rate of 0.06 per year is closest to: Note: The given interest is already in decimal form. Do not round in between solution. Final answer round to the nearest whole number.

The present sum needed to provide for an annual withdrawal of $5,000 for 15 years beginning 5 years from now at an interest rate of 0.06 per year is closest to: Note: The given interest is already in decimal form. Do not round in between solution. Final answer round to the nearest whole number.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 13E

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

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The present sum needed to provide for an annual withdrawal of $5,000 for 15 years beginning 5 years from now at an interest rate of 0.06 per year is closest to:

Note: The given interest is already in decimal form. Do not round in between solution. Final answer round to the nearest whole number.

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