Answer:
$9,095.44
Explanation:
First and foremost, we need to compute the present value of the perpetual stream of payments at t=16 using the below formula:
present value(at t=16)=payment/interest rate
present value(at t=16)=$1000/5.5%
present value(at t=16)=$18,181.82
Then we discount it backward for 9 years. Note that $18,181.82 is at the beginning period 16 which is equivalent to the end of period 15, hence,15 minus 6 gives 9 years.
Value at t=6 is using the present value formula below:
PV=FV/(1+r)^n
PV=$18,181.82 /(1+8%)^9
PV=$9,095.44
