Answer :
The present value of the payments is $73,600.87.
Present value of a cash flow is the value of the cash flow today. This is determined by adding the discounted cash flows of the cash flows together.
Discounted year 1 cash flow: 10,000 / (1.06) = 9,433.96
Discounted year 2 cash flow: 10,000 / (1.06)^2 = 8,899.96
Discounted year 3 cash flow: 10,000 / (1.06)^3 = 8,296.19
Discounted year 4 cash flow: 10,000 / (1.06)^4 = 7,920.94
Discounted year 5 cash flow: 10,000 / (1.06)^5 = 7,472.58
Discounted year 6 cash flow: 10,000 / (1.06)^6 = 7,049.61
Discounted year 7 cash flow: 10,000 / (1.06)^7 = 6,650.57
Discounted year 8 cash flow: 10,000 / (1.06)^8= 6,274.12
Discounted year 9 cash flow: 10,000 / (1.06)^9 = 5,918.98
Discounted year 10 cash flow: 10,000 / (1.06)^10 = 5,583.95
The sum of the discounted cash flows = $73,600.87
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