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You are considering two home security companies for your new house. The first company offers free installation and equipment, but will charge you $570.00 per year forever. The second company charges $851.00 for installation, but will charge you $229.00 per year forever. Assume that payments are at the END of the year. Your personal interest rate is 4.00% per year, and you want to evaluate each proposal.

What is the present value (PV) of the free installation? What is the PV of the paid installation?

Respuesta :

ammad472

Answer:

Present value (PV) of the free installation = $ 548

PV of the paid installation = $ 1,071

Explanation:

Formula of PV = FV/ ( 1 + i) ^ n

where,

FV = Future Value

i = Discount Rate

n = No. of Years

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