Your crazy uncle left you a trust that will pay you $16,000 per year for the next 23 years with the first payment received one year from today. If the appropriate interest rate is 4.9 percent, what is the value of the payments today

$217,866.12

Explanation:

Using the annuity payment formula

P = r(PV)/[1 - (1 + r)^ -n]

Where

r is rate per period = 49% = 0.049

PV is present value = ?

P is the payment = $16000

n is the number of periods = 1

Therefore

$16000 = 0.049PV / (1 − 1.0490)^-1

= 0.049PV = $16000 × (1 - 1/1.049)

Make PV the subject

PV = $16,000 × [(1 −1/1.049)/0.049]

= $217,866.12

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i hope this you! : )

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