$482.72
$661.68
$697.25
$721.90
$852.83
'
Question
What is the total present value of $50 received in one year, $200 in two years, and $800 received in six years if the discount rate is 8.00%? Show the work
$482.72
$661.68
$697.25
$721.90
$852.83
Solution
$50 is the present value today which is to be received at the end of first year which will not be the present value as of today but discounted by 8% over a year. which means $50 x 0.92593 = $46.2965 at the end of year. if you add 8% in $46.2695 then it will be $50 i.e $46.2965+8%=$50. Like wise $ 200 is the present value of today which will not be the same present value at the end of year 2 as it will be lesser by 8% over the two years. i.e $200 x 1/(1.08)^{2} = 171.46. If you add 8% in $171.46 for two years then it will be $200 i.e 171.46+8%=$185.18+8%=$200 and so on.
You can see the present value table and future value table and annuitty table on any search engine
Year 
Ammount 
Working of Present Value Annuity Factor (PVAF)@8% 
PVAF@8% 
Working : Amount x PVAF@8% 
Present Value 
1 
50 
1/(1+8%) or 1/1.08=0.9259 
0.9259 
50 x 0.92593 = 46.2965 
46.295 
2 
200 
0.9259/(1.08)=0.8573 or 1/(1.08)^{2} 
0.8573 
200 x 0.8573 = 171.46 
171.46 
6 
800 
0.6806/(1.08)=0.6302 or 1/(1.08)^{6} = 0.6302 
0.6302 
800 x 0.6302 = 504.16 
504.16 





721.915 
'