Question
  1. The present value of a constant stream can be written out in long form with equation 1 below, where PV stands for Present Value, A stands for the constant dollar amount being received, and T stands for the number of periods for which you receive the constant dollar amount. Please demonstrate the steps you need to take to move from equation 1 (Eq. 1) to the simplified equation 2 (Eq. 2). Show your work for each step and offer any explanations required.

A(1 A(1i2A(1 i)3 1) A(1+ i) (T) PVA A(1 Eq. 1 (1 А * 1 PVA= Eq. 2 i(1i

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Answer #1

Equation (4) A PVA =A ti) (けリT lti)2 Taking A Commans PVA- A here the beies is lommen di ometnc prc with thne bum of GP is Sr1+i-1 Iti)i St iTI Equateri le) PVA = A + 2i(Iti)T

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