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    Calculating present value of down payments, lotteries and leases

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    Assist with the below present value situation.

    Using a present value table, calculator, or a computer program present value function, calculate the present value for the following: (Use appropriate factor(s) from the tables provided.)

    a. A car down payment of $30,000 that will be required in eight years, assuming an interest rate of 14%.

    b. A lottery prize of $6 million to be paid at the rate of $300,000 per year for 20 years, assuming an interest rate of 12%.

    c. The same annual amount as in part b, but assuming an interest rate of 14%.

    d. A capital lease obligation that calls for the payment of $8,000 per year for 10 years, assuming a discount rate of 8%.

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    Solution Summary

    The solution provide 4 examples of computing present value in different scenario with different interest rate.