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What is the present value of all future payments

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Question - Gabry Ponte has a contract in which he will receive the following payments for the next five years: $7,000, $8,000, $9,000, $10,000, $11,000. Gabry will then receive an annuity of $14,500 a year from the end of the sixth year through the end of the fifteenth year. The appropriate discount rate is 9 percent.

Required -

a. What is the present value of all future payments?

b. If he is offered a buyout of the contract for $36,000, should he do it?

Reference no: EM133167104

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