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An investment offers $8600 per year for 5 years, with the first payment occurring 12 years from now. If the required return is 8 percent, what is the value of the investment? (HINT: Remember that when you calculate the PV of the annuity, the claculator gives you the present value of the annuity 1 period before the annuity starts. So if the annuity starts in year 7, that calculator will to give you the persent value of annuity in year 6. Now you have to bring this number to period 0 by inputting: N=6 (1 period before the annuity starts, in your case it would be a different number depending when your annuity starts) R=8 FV=Present value of annuity you found in step 1. And you solve for PV)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92413040

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