7 What is the PV of a lumpsum of 62000 to be received in 6 y

7) What is the PV of a lumpsum of $62,000 to be received in 6 years if the discount rate is 6%?

Solution

This question requires application of Time Value of mOney function: FV = PV * (1 + r)ⁿ

The lumpsum amount you receive in 6th year is FV, which needs to be discounted by 6%

PV = 62000/(1 + 6%)⁶

PV = 62000/1.4185

PV = $43,707.55 --> Answer