The present value of an annuity for a series of annual cash flows of 25000$ for 6 years at a 12% discount rate is $102,785.2.
A predetermined sum of money that you will receive annually for the rest of your life is called an annuity. An annuity is a contract that you have with an insurance provider that calls for regular payments to be made by the insurer to you, either now or in the future.
The present value of annuity (PVA) = A x [1 – [ (1+r)^-n] / r]
Annual Cash flow = A, Number of years=n, Rate per period= r
A=25,000
n= 6
r= 12%
PVA= 25,000 × 1- (1.12)^(-6)/0.12
PVA= $102,785.
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