This document describes an investment that will pay $11,000 annually for 9 years and a one-time payment of $100,000 at the end of the 9th year. It asks to determine the present value of this investment using an 8% interest rate by calculating the present value of the annual payments as an annuity and the lump sum payment individually and summing them.

1. An investment will pay $11,000 at the end of each year for nine years and a one-time payment of
$100,000 at the end of the ninth year. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the
appropriate factor(s) from the tables provided.)
Determine the present value of this investment using a 8 percent interest rate.
An investment will pay $11,000 at the end of each year for nine years and a one-time payment of
$100,000 at the end of the ninth year. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the
appropriate factor(s) from the tables provided.)
Solution
Answer:
Present value of investment = Present value of Annual income (Annuity) $11000 for 9 years
+ Present value of lump sum amount $100000 at the end of year 9
Present value of Annual income (Annuity) $11000 for 9 years = $11000 * PVAF (8%, 9 years )
For PVAF refer to present value of annuity table (8% column and 9 periods