At what discount rate, will the present value of a $10,000 ordinary annuity payments for...
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Accounting
At what discount rate, will the present value of a $10,000 ordinary annuity payments for 5 years be worth $35,000 today?
7.90%
11.22%
13.20%
16.41%
None of the above
Solution is below. Need clarification on how problem was answered. I need to know formula on how solution was discovered.
Answer: 13.20%
Inputs: PV = -35,000
FV = 0
N = 5
PMT = 10,000
Solve for I = 13.20%
PV is input as a negative because it represents money leaving your pocket.
The payments are input as positives because they represent money coming into your pocket.
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You can see the logs in the Dashboard.