Answer:
$90,119.405
Explanation:
Given:
Periodic payment (p) = $25,000
Number of payment (n) = 5
Interest rate (r) = 12% = 12 / 100 = 0.12
Present value = ?
Computation of Present value :
[tex]Present\ Value = PMT [\frac{1-(1+i)^{-n}}{i}] \\\\ Present\ Value= 25,000 [\frac{1-(1+0.12)^{-5}}{0.12}]\\\\Present\ Value= 25,000 [\frac{1-(1.12)^{-5}}{0.12}]\\\\Present\ Value= 25,000 [\frac{1-0.567426856}{0.12}]\\\\Present\ Value= 25,000 [\frac{0.432573144}{0.12}]\\\\Present\ Value= 25,000 [3.6047762]\\\\Present\ Value= 90,119.405[/tex]
We be will invest $90,119.405 (approx).
