Present Value using a 6% rate of Interest: Calculate the value of this income stream. Remember to total your numbers.
n Income
1 $2000
2 $2000
3 $2000
4 $2000
a. PV of an ordinary annuity:
b. PV of an annuity due:
a.Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate
=2000[1-(1.06)^-4]/0.06
=2000*3.46510561
=$6930.21(Approx).
b.Present value of annuity due=Present value of annuity*(1+Rate)
=6930.21*1.06
=$7346.02(Approx).
Present Value using a 6% rate of Interest: Calculate the value of this income stream. Remember to total...
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