Industrial Electric Services has a contract with an Embassy in Mexico to provide maintenance for scanners and other devices in the building. What is the present worth of the contract (in year 0) if the company will receive a total of nine $12,000 pay­ments beginning in year 2 and ending in year 10 and the interest rate is 10% per year.

What will be an ideal response?


P = 12,000(P/A,10%,9)(P/F,10%,1)
= 12,000(5.7590)(0.9091)
= $62,826

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