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What is the value of investment today

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Reference no: EM132433849

Problem: An investment will pay $5,000 per year for 10 years, with the first payment occurring one year from today.  

A. If the interest rate is 6%, what is the value of this investment today?

B. What would the value of the investment be if the $5,000 annual cash flow lasts 20 years (and the interest rate is still 6%)?  

C. How come the value of the investment IS NOT twice as much in part B as compared to part A?  (After all, you will receive double the amount of cash over the 20 year annuity: 5000 X 20 vs. 5000 X 10).

Reference no: EM132433849

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