$36,000 PAYABLE AT THE END OF THE SEVENTH, EIGHT, NINTH, AND TENTH PERIODS AT 12%
To calculate the present value of $36,000 payable at the end of the seventh, eighth, ninth, and tenth periods with an interest rate of 12%, you can use the present value formula for an ordinary annuity. The formula is:
PV = PMT * (1 - (1 + r)^(-n))/r
Where:
PV = Present Value
PMT = Payment amount per period
r = Interest rate per period
n = Number of periods
First, let's calculate the present value for each payment separately:
For the payment at the end of the seventh period:
PMT = $36,000
r = 12% (or 0.12 in decimal form)
n = 7
Now, substituting these values into the formula:
PV7 = $36,000 * (1 - (1 + 0.12)^(-7))/0.12
Calculating this expression will give you the present value for the payment at the end of the seventh period.
Repeat this calculation for the payments at the end of the eighth, ninth, and tenth periods, using the corresponding values of n (8, 9, and 10).
Finally, you can find the total present value by summing the present values of each payment:
Total PV = PV7 + PV8 + PV9 + PV10
Once you have all the present values, simply add them together to find the total present value.