An investment is expected to make future returns at a rate of £1,800 per annum over the next 10- year period. Assuming a nominal discount rate of 5% per annum convertible quarterly, find the present value of the stream of future incomes if the payments are received: (i) quarterly in advance;
An investment is expected to make future returns at a rate of £1,800 per annum over the next 10- year period. Assuming a nominal discount rate of 5% per annum convertible quarterly, find the present value of the stream of future incomes if the payments are received: (i) quarterly in advance;
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
correct answers:
i) PV = 14,233.6
II) PV = 13,791.60
III) PV = 13,444.70
no tables, ONLY formulas, please
Transcribed Image Text:An investment is expected to make future returns at a rate of £1,800 per annum over the next 10-
year period. Assuming a nominal discount rate of 5% per annum convertible quarterly, find the
present value of the stream of future incomes if the payments are received:
(i)
quarterly in advance;
(ii)
(iii)
annually in arrears;
at the end of every 2 years.
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