An investment offers 11600 per year for 20 years with the fi

An investment offers $11600 per year for 20 years, with the first payment occurring 5 years from now. If the required return is 13 percent, what is the value of the investment?

Solution

PMT = 11,600, FV = 0, N = 20, rate = 13%

use PV function in Excel

value in 4 years = 81,487.1183

value today = 81,487.1183/(1.13^4) = 49,977.58