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You are getting payments of $8000 at the beginning of every year and they are to last another five years
You are getting payments of $8000 at the beginning of every year and they are to last another five years. At 6%, what is the value of this annuity?
Expert Solution
Computation of Value of Annuity using PV Function in Excel:
=-pv(rate,nper,pmt,fv)
Here,
PV = Value of Annuity = ?
Rate = 6%
Nper = 5 Years
PMT = $8,000
FV = 0
Type = 1 (Beginning of the year)
Substituting the values in formula:
=-pv(6%,5,8000,0,1)
PV or Value of Annuity = $35,720.84
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