You plan to deposit $13,000 in a bank account at the end of the year. Next year you will deposit $10,000, then $10,000 in the third year, and $4000 in the fourth year. What is the PV if the discount rate is 5%

Respuesta :

The present value for the investment and deposits as given in the condition above will be $33380.43.

What is present value?

The certain amount of the current value of an investment, which is definite to occur in future at a compounded rate of interest for any given period, is known as the present value of an annuity.

The computation of present value for the above condition will be,

[tex]\rm Present\ Value= \dfrac{Cash\ Flow}{1+Rate\ of\ Discount\ ^t^i^m^e}\\\\\rm Present\ Value= \dfrac{13000}{1.05}+ \dfrac{10000}{1.05^2}+ \dfrac{10000}{1.05^3}+ \dfrac{4000}{1.05^4}\\\\\rm Present\ Value= \$33380.43[/tex]

Hence, the computation of the present value is as aforementioned.

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