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Suppose your opportunity cost rate is 11 percent compounded annually.

(a) How much must you deposit in an account today if you want to pay yourself $230 at the end of each of the next 15 years?

pur-new-sol

We can calculate the present value by using the following formula in excel:-

=-pv(rate,nper,pmt,fv)

Here,

PV = Present value

Rate = 11%

Nper = 15 periods

Pmt = $230

FV= $0

Substituting the values in formula:

= -pv(11%,15,230,0)

= $1,653.90

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