document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=350094>Question 350094</A>: <I><SPAN STYLE=\"word-break: break-all;\"> please help me!\r<BR>\n" );
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document.write( "	Suppose you expect to receive $1,000 per year for each of the next 15 years, except that you will not receive any payments in years 3 and 5.<BR>\n" );
document.write( "	What is the present value of this amount if the discount rate is 12% per year? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #250247 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=250247\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> We'll assume you start from year 0.\r<BR>\n" );
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document.write( "The present value of 15 years worth of payments would be $6,810.864489.\r<BR>\n" );
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document.write( "This includes payments for years 3 and 5.\r<BR>\n" );
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document.write( "You need to subtract them.\r<BR>\n" );
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document.write( "The present value for a $1,000 payment in year 3 is equal to $711.7802478.\r<BR>\n" );
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document.write( "The present value for a $1,000 payment in year 5 is equal to $567.4268557.\r<BR>\n" );
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document.write( "Subtract both these payments from the present valueof $6,810.864489 and you have your answer.\r<BR>\n" );
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document.write( "The answer would be $5,531.657386\r<BR>\n" );
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document.write( "I used a financial calculator, but you'll get the same result by use of the present value of payments equation and the present value of a future value equation.\r<BR>\n" );
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document.write( "For the 15 years of payments, use the present value of payments equation.\r<BR>\n" );
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document.write( "For the present value of the missing payments, use the present value of a future value equation.\r<BR>\n" );
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document.write( "A cash flow analysis, using the same technique, would show the following result:\r<BR>\n" );
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document.write( "year	payment         present value of payment\r\n" );
document.write( "0		\r\n" );
document.write( "1	$1,000.00	$892.86\r\n" );
document.write( "2	$1,000.00	$797.19\r\n" );
document.write( "3	$1,000.00	$711.78\r\n" );
document.write( "4	$1,000.00	$635.52\r\n" );
document.write( "5	$1,000.00	$567.43\r\n" );
document.write( "6	$1,000.00	$506.63\r\n" );
document.write( "7	$1,000.00	$452.35\r\n" );
document.write( "8	$1,000.00	$403.88\r\n" );
document.write( "9	$1,000.00	$360.61\r\n" );
document.write( "10	$1,000.00	$321.97\r\n" );
document.write( "11	$1,000.00	$287.48\r\n" );
document.write( "12	$1,000.00	$256.68\r\n" );
document.write( "13	$1,000.00	$229.17\r\n" );
document.write( "14	$1,000.00	$204.62\r\n" );
document.write( "15	$1,000.00	$182.70\r\n" );
document.write( "sum of payments and present value of payments from year 1 through year 15 are shown below.	\r\n" );
document.write( "	$15,000.00	$6,810.86\r\n" );
document.write( "missing payments and present value of apyments that need to be subtracted are shown below.		\r\n" );
document.write( "3	$1,000.00	$711.78\r\n" );
document.write( "5	$1,000.00	$567.43\r\n" );
document.write( "total minus missing payments and present value of missing payments is shown below.		\r\n" );
document.write( "	$13,000.00	$5,531.66\r\n" );
document.write( "</PRE>\r<BR>\n" );
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document.write( "the formulas you would use are shown below:\r<BR>\n" );
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document.write( "PRESENT VALUE OF A PAYMENT\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=+PV%28PMT%29+=+%28PMT+%2A+%281+-+%281+%2F+%281%2Bi%29%5En%29%29%2Fi%29+ ALIGN=MIDDLE  ALT=\"+PV%28PMT%29+=+%28PMT+%2A+%281+-+%281+%2F+%281%2Bi%29%5En%29%29%2Fi%29+\"   DISABLED_style= \"max-width:90%; height:auto;\" >\r<BR>\n" );
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document.write( "PV = present value<BR>\n" );
document.write( "PMT = payment per time period<BR>\n" );
document.write( "i = interest rate per time period<BR>\n" );
document.write( "n = number of time periods\r<BR>\n" );
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document.write( "PRESENT VALUE OF A FUTURE AMOUNT\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=PV%28FA%29+=+FA+%2F+%28%281%2Bi%29%5En%29+ ALIGN=MIDDLE  ALT=\"PV%28FA%29+=+FA+%2F+%28%281%2Bi%29%5En%29+\"   DISABLED_style= \"max-width:90%; height:auto;\" ><BR>\n" );
document.write( "PV = Present Value<BR>\n" );
document.write( "FA = Future Amount<BR>\n" );
document.write( "i = Interest Rate per Time Period<BR>\n" );
document.write( "n = Number of Time Periods\r<BR>\n" );
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document.write( "Using these formulas, I was able to duplicate the answer.\r<BR>\n" );
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document.write( "You should be able to also.\r<BR>\n" );
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document.write( "Write if you have questions.\r<BR>\n" );
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document.write( " </SPAN>\n" );
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