Assume that time is measured in months. Calculate the present value at time 0 of a payment of £131 paid at time 18, using an interest rate of 9% per annum effective.
Assume that time is measured in months. Calculate the present value at time 0 of a payment of £131 paid at time 18, using an interest rate of 9% per annum effective.
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
Assume that time is measured in months. Calculate the
Expert Solution
Step 1
Present value of future amount
With periodic interest rate (r), period (n) and future value (FV), the present value (PV) is calculated as shown below.
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