# Difference in the Present Value

You are scheduled to receive annual payments of $15,000 for each of the next 13 years. The discount rate is 9 percent. What is the difference in the present value if you receive these payments at the beginning of each year rather than at the end of each year?

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#### Solution Preview

Let us find out the present value in each of the cases

If the amount is received at the end

P=A*((1/r)-((1/(r*((1+r)^n)))

P=present value, A= Annuity ...

#### Solution Summary

This solution calculates the difference in the present value when one receives payments at the beginning of each year rather than the end of the year based on a 9 percent discount rate.

$2.19