Question
Below is a table for the present value of $1 at Compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797
Below is a table for the present value of $1 at Compound interest.
Year | 6% | 10% | 12% |
1 | 0.943 | 0.909 | 0.893 |
2 | 0.890 | 0.826 | 0.797 |
3 | 0.840 | 0.751 | 0.712 |
4 | 0.792 | 0.683 | 0.636 |
5 | 0.747 | 0.621 | 0.567 |
Below is a table for the present value of an annuity of $1 at compound interest.
Year | 6% | 10% | 12% |
1 | 0.943 | 0.909 | 0.893 |
2 | 1.833 | 1.736 | 1.690 |
3 | 2.673 | 2.487 | 2.402 |
4 | 3.465 | 3.170 | 3.037 |
5 | 4.212 | 3.791 | 3.605 |
Using the tables above, if an investment is made now for $18,150 that will generate a cash inflow of $6,050 a year for the next 4 years, what would be the net present value (rounded to the nearest dollar) of the investment, assuming an earnings rate of 10%?
$18,150
$1,029
$6,050
$19,179
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