Question

What is the discounted value of $1327.00 paid at the end of every six months for 10 years if interest is 8% per annum compounded quarterly?

The discounted value is $____?

(Round the final answer to the nearest cent as needed. Round all intermediate values six decimal places as needed.)

Please help!!

!!!!!

assistancr needed !!

Answer 1

Semi annual payments = $1,327 Term = 10 Years * 2 = 20 Periods Interest rate = 8% Compounded quarterly Effective annual interest rate = [1 +I/n 'n - 1 = [1 + 8% / 4]^4 - 1 = [1 + 2% -4 -1 = 1.08243216 - 1 = 0.08243216 = 8.243216 % Effective interest rate per semi annual period = [1 + EAR] (1/n) -1 = [1 +8.243216%] (1/2) - 1 = 1.0404 - 1 = 0.0404 = 4.04 % Per period Discounted value = Semi annual payments * PVIFA(I, n) = $1,327 * PVIFA(4.04%, 20) = $1,327 * 13.542316 = $17.970.65333 = $17,971 (Rounded)