nnuity Payment Payment Frequency Time Period (years) Nominal Rate (%) Interest Compounded Present Value of the Annuity $800 every month 2 1/4 1 4 6 monthly
nnuity Payment Payment Frequency Time Period (years) Nominal Rate (%) Interest Compounded Present Value of the Annuity $800 every month 2 1/4 1 4 6 monthly
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
Related questions
Question
nnuity Payment |
Payment Frequency |
Time Period (years) |
Nominal Rate (%) |
Interest Compounded |
Present Value of the |
|
---|---|---|---|---|---|---|
$800 | every month |
2 1/4
|
6 | monthly |
Expert Solution
Step 1
The present value of an annuity is the current value of a stream of future payments, discounted to reflect the time value of money. It is used to determine the value of an annuity investment at a given point in time. The present value of an annuity is an important concept in finance, as it allows investors to compare the value of different annuities or investment options and make informed decisions about where to put their money.
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