What is the present value of a 4-annual payment, $444 per year annuity at an interest rate of 4% if the first payment is received at the beginning of year 4? The answer is 1490 but how. no excel with calculator please.
Present value=Cash flows*Present value of discounting factor(rate%,time period)
=444/1.04^3+444/1.04^4+444/1.04^5+444/1.04^6
=444[1/1.04^3+1/1.04^4+1/1.04^5+1/1.04^6]
=444*3.35604218
=$1490(Approx).
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