SOLUTION: Art wants to know how much he'll have to invest today to receive an annuity of $8,000 for three years if interest is earned at 10% annually.

Question 1199360: Art wants to know how much he'll have to invest today to receive an annuity of $8,000 for three years if interest is earned at 10% annually.
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
you can use a financial calculator to solve this, but it's small enough so that you can also do it manually.
i'll do all 3.
the assumption is that he will start receiving the annuity in one year.
using a calculator, i get a present value of 19,894.82.

doing it manually, you would do the following.
8000 / 1.10 = 7272.73 rounded to 2 decimal places.
8000 / 1.10^2 = 6611.57 rounded to 2 decimal places.
8000 / 1.10^3 = 6010.52 rounded to 2 decimal places.
the present value sum is equal to 19894.82.

the present values agree, as hey should.

your solution is that you would have to invest 19894.82 today so that you could receive 8000 for the next 3 years when the interest rate is 10% per year.

RELATED QUESTIONS
You have ₱15,000 and wish to receive an annual annuity for 10 years. The annual... (answered by ikleyn)

Shahab has an opportunity to invest in a fund which earns 6% profit compounded annually.... (answered by Theo)

Mr Hammond is 45 years of age and has a life expectancy of 10 more years. He wishes to... (answered by ikleyn,MathTherapy)

Alfred wants to invest $4,000 at 6% simple interest rate for 5 years. How much interest... (answered by checkley77)

Alfred wants to invest $4,000 at 6% simple interest rate for 5 years. How much interest... (answered by stanbon)

Simeon wants to invest an amount now that will have a total value of $10 000 after 5... (answered by Glaviolette,Alan3354)

Alfred wants to invest $4,000 at 6% simple intetest rate for 5 years. How much interest... (answered by jorel555)

1. Mike�s Sport Shop deposits $3,600 at the end of each year for 12 years at 7% annual... (answered by edward d,Hyot)

Alfred wants to invest $4,000 at 6% simple interest rate for 5 years. How much interest... (answered by Mathtut)