Answer:
PV= $1,173.44
Explanation:
Giving the following information:
your tenant has agreed to pay $150 per month. There are eight months left on the lease, the appropriate interest rate is 6%, compounded monthly.
To calculate the net present value, first, we need to calculate the final value and then use the present value formula.
FV= {A*[(1+i)^n-1]}/i
A= annual pay= 150
i=0.06/12= 0.005
n=8
FV= {140[(1.005^8)-1]}/0.005= 1,221.21
Now, we calculate the present value:
PV= FV/(1+i)^n
PV= 1,221.21/1.005^8= $1,173.44
