An investment pays you $20 000 at the end of this year, and $10 000 at the end of each of the four following years. What is the present value (PV) of this investment, given that the interest rate is 4% per year?Question 10Select one:$45 913$54 134$58 614$42 150

To calculate the present value (PV) of this investment, we need to discount each future payment back to the present using the formula for the present value of a single future payment, which is:

PV = FV / (1 + r)^n

where:

• FV is the future value of the payment,
• r is the interest rate, and
• n is the number of periods until the payment is received.

Let's calculate the present value of each payment:

1. For the $20,000 received at the end of this year, n = 1, so:

PV1 = $20,000 / (1 + 0.04)^1 =$19,230.77

2. For the $10,000 received at the end of the second year, n = 2, so:

PV2 = $10,000 / (1 + 0.04)^2 =$9,259.26

3. For the $10,000 received at the end of the third year, n = 3, so:

PV3 = $10,000 / (1 + 0.04)^3 =$8,899.32

4. For the $10,000 received at the end of the fourth year, n = 4, so:

PV4 = $10,000 / (1 + 0.04)^4 =$8,561.68

5. For the $10,000 received at the end of the fifth year, n = 5, so:

PV5 = $10,000 / (1 + 0.04)^5 =$8,245.97

The total present value of the investment is the sum of these amounts:

PV = PV1 + PV2 + PV3 + PV4 + PV5 = $19,230.77 +$9,259.26 + $8,899.32 +$8,561.68 + $8,245.97 =$54,197

So, the closest answer to the total present value of the investment is $54,134.