Answer:
Explanation:
a.)
This is an annuity type of question. Using a financial calculator, input the following to find the PV of the Ordinary annuity;
Total duration; N = 15*12 = 300
Monthly rate; I/Y = 7.2%/12 = 0.6%
One-time future cashflow; FV = 0
Recurring monthly payment; PMT = 150
then compute present value; CPT PV = $20,845.24
b.) This is an <em>Annuity Due </em>type of question since the recurring monthly payment occur at the beginning of the month.
Using a financial calculator, change the mode to "BEG" and input the following to find the PV of the annuity due;
Total duration; N = 15*12 = 300
Monthly rate; I/Y = 7.2%/12 = 0.6%
One-time future cashflow; FV = 0
Recurring monthly payment; PMT = 150
then compute present value; CPT PV = $20,970.31
