Question
Can someone please help explaining how to solve the below using a financial calculator? 13) What is the present value today of an ordinary annuity
Can someone please help explaining how to solve the below using a financial calculator?
13) What is the present value today of an ordinary annuity cash flow of $3,000 per year for forty years at an interest rate of 10.0% per year if the first cash flow is six years from today?
A) $120,000.00
B) $1,327,777.67
C) $45,138.89
D) $33,730.40
Answer:D
Explanation:D) Although this problem is not directly addressed in the text, its intended effect is to reinforce the idea of present value. In this kind of problem, the student must find a present value in the future, and then discount that renamed future value back to the present value at time zero.
I tried getting the PV in the future (after 6 years) and got 29,337.15 and discounting that to get today's PV gives me an even smaller number. I can't get $33,730.40 no matter how I try it.
Thank you,
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