Based on what we learned in Chapter 4, draw the timeline, and explain/discuss how you would calculate the present value of a financial instrument to promises to pay $500 annually (at the end of each year) for the next 5 years plus $2,500 at the end of the fifth year, assuming a discount rate of 10%.
Hint:
This question/problem does NOT require a calculation; it simply requires an explanation of how you would perform the proper calculation using the data provided.