Question
Need help understanding the present value concept. Here is my example problem. On May 15, 2018 Rick Newlin reached a settlement on a long overdue
Need help understanding the present value concept. Here is my example problem.
On May 15, 2018 Rick Newlin reached a settlement on a long overdue contract. The settlement results in Rick receiving a total of $1,900,000 -- scheduled over 4 annual payments of $475,000 each. The first payment starts on May 15, 2021, with the remaining 3 payments following on May 15, 2022, May 15, 2023, and May 15, 2024. Rick wants to know the present value of his settlement today on May 15, 2018, at a 6% interest rate. Show all calculations.
I used the tables for present value but I am getting the wrong figure. Can you explain in detail basic step by step the calculation part. Thank you so much.
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