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2 years ago

What+is+the+present+value+of+a+5-year+annuity+due,+with+a+$100+annual+cash+flow,+paid+semi-annually,+and+a+discount+rate+of+20%?

Business

1 answer:

iVinArrow [24]2 years ago

8 0

This question requires the application of PV of an annuity due, which can mathematically be represented as:

1- (1 + i)- PV of an Annuity Due =R*- i *(1 + i)

i = 20%/2 = 10% (semi-annually)

n = 5 * 2 = 10 semi-annual periods

R = $100/2 = $50 (semi-annually)

PV = 50* a 1-(1 + 0.10) -10 0.10 *(1 + 0.10)

PV = 50 * 6.1446 * 1.1

PV = $337.95

Annual actually means ``takes place every year,'' but it applies to eye exams, Christmas parties, etc. For plants, annual means "complete the life cycle in a single growing season or year." Annual Payment is the term for all payments made annually. Due to the nature of the financial cycle, payments are made annually. Some payments are made by him once a year. Annual payments may include salary and benefits paid once a year.

Monthly payments are best for most people as they are easier to budget for. Also, semi-annual or quarterly payments require large payments without benefiting from discounts.

Learn more about annually here

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Answer:

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Suppose 90-day investments in Britain have a 6% annualized return and a 1.5% quarterly (90-day) return. In the U.S., 90-day inve

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