Question 24.5: DISCOUNTED SERIES PAYMENT Determine the present worth amount...
DISCOUNTED SERIES PAYMENT
Determine the present worth amount, which is invested at 4% interest compounded annually over a 10-year period and will produce an income or payments of USD 50,000 a year for each of the 10 years.
PV = (R/i)[(1 + i)^{n} − 1]/(1 + i)^{n}.
PV = (50,000∕0.04)[(1 + 0.04)^{10} − 1]∕(1 + 0.04)^{10}
= USD 405,400.
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