Newship inc. has borrowed from its bank at a rate of 8 percent and will repay the loan with interest over the next five years. its scheduled payments, starting at the end of the year are as follows—$450,000, $560,000, $750,000, $875,000, and $1,000,000. what is the present value of these payments?

Present value is given as :

Therefore Present Value for year one is

=

=$416,666.6

Similarly Present Value for year two is

=

=$480,109.7

Present Value for year three is

=

=$595,374

Present Value for year four is

=

=$643,151

Present Value for year five is

=

=$680,583

Therefore the net present value is :

=$416,666.6+$480,109.7+$595,374+$643,151+$680,583

=$1,845,510.5