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You are scheduled to receive annual payments of $9,600 for each of the next 22 years. Your discount rate is 8 percent. What is the difference in the present value if you receive these payments at the beginning of each year rather than at the end of each year?

Respuesta :

Answer:

$7,834

Explanation:

The present value is cash flow discounted at the discount rate.

Present value can be found using a financial calculator

Cash flow from year one to twenty two =$9,600 

Discount rate = 8%

Present value if payments are received at the beginning of each year = $105,761.31

Present value if payments are received at  the end of each year = $97,927.14

Difference = 105,761.31 - 97,927.14

= $7,834

I hope my answer helps you

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