Use this method:

The problem illustrates finding the PVA when the first payment starts beyond the first time period. There are a number of ways to approach solving this problem, and other than treating each of the future payments as a lump sum and then adding them up (taking way too much time and too many opportunities for error) there is no best way. One suggestion is to solve the problem as if the first payment were to be made at the end of year 1, and then to discount that annuity by dividing by (1+r) raised to the power equal to the number of years when no payments are made. And remember, drawing out a time line is very helpful here. The question should be answered in two steps: (1) Calculate the present value of the annuity as if it begins at the end of year 1. (2) Discount the just calculated annuity over the number of years that the annuity pays $0. For example, suppose that an annuity of $655 for 9 consecutive years does not begin for 7 years. Using an interest rate of 5%: PVA = $655(PVIFA 5% 9 years) / (1.05) to the power of 6 PVA = $4,655.62 / 1.3401 PVA = $3,474.09 Note that the discounting for 6 years accounts for the fact that in step one the calculation places you in year 6 of the time line - one time period prior to when the annuity begins.

For the following problem:

Your grandmother left you an inheritance that pays $570 at the end of each year for a total of 12 consecutive years. However, because of your young age, the payments will not begin until the end of 7 years. If the interest rate is 6.00%, what is the equivalent value of your inheritance today?