We are funding an organization for ten years. The first payment will be made one year from today (end of year one) and will be $8,350. Each year after that, the organization will receive payment from us annually. The payment will increase at a rate of 2% per year after the second payment. If the annual interest rate is 15%, what is the present value of this endowment?
We are funding an organization for ten years. The first payment will be made one year from today (end of year one) and will be $8,350. Each year after that, the organization will receive payment from us annually. The payment will increase at a rate of 2% per year after the second payment. If the annual interest rate is 15%, what is the present value of this endowment?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 16P
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We are funding an organization for ten years. The first payment will be made one year from
today (end of year one) and will be $8,350. Each year after that, the organization will receive
payment from us annually. The payment will increase at a rate of 2% per year after the second
payment. If the annual interest rate is 15%, what is the present value of this endowment?
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Could you explain how you got $44,139.39. What are the specific calculations for NPV(15%B3:B12)?
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