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You have a partnership stake in a business that pays you equal payments of $3,000 at the end of each year for the next seven years. If the annual interest rate stays constant at 6%, what is the value of these payments in today’s dollars? Round your answer to the nearest whole dollar. $16,747 $17,752 $14,235 $20,934

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Answer:

The correct answer is A.

Explanation:

Giving the following information:

You have a partnership stake in a business that pays you equal payments of $3,000 at the end of each year for the next seven years. The annual interest rate stays constant at 6%.

To calculate the present value we need to use the ner present value formula:

NPV= ∑[Cf/(1+i)^n]

Cf= cash flow

For example:

Year 1= 3,000/1.06^1

Year 3= 3,000/1.06^3

Year 6= 3,000/1.06^6

NPV= $16,747.14

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