Question
Asked Dec 8, 2019
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The present value of $500 to be received at the end of each year for seven years at a
discount rate of 8 percent is ? 

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Expert Answer

Step 1

Annuities are a regular stream of payments made for a defined period. Resent value of these annuities can b determined using a formula.

Step 2

Here,

Annuity payment ( P ) = $500

Number of years ( n ) = 7

Discount rate (...

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Using the Present Value annuity formula Px 1-. (1+r)" PVA = 1 $500x|1- (1+0.08)' 0.08 $500x (1-0.583490395262134) 0.08 $500x0.416509604737866 0.08 = $2603.18502961166 ||

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