Present value of an annuity discounted back
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(Present value of an annuity) What is the present value of the following annuities?
a. $2,500 a year for 10 years discounted back to the present at 7 percent
b. $70 a year for 3 years discounted back to the present at 3 percent
c. $280 a year for 7 years discounted back to the present at 6 percent
d. $500 a year for 10 years discounted back to the present at 10 percent
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Solution Summary
This solution uses the formula for the present value of an annuity to calculate each of the questions in a simple, step by step method.
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PV of annuity = Annual Cash Flow / int Rate [ 1 - 1/(1+int rate)^#years]
a. $2,500 a year for 10 years discounted back to the ...
Education
- BE, Bangalore University, India
- MS, University of Wisconsin-Madison
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