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
Please do it on excel like you did on the last time thanks
Transcribed Image Text:pa scholarsh
an be invested a
today?
Expert Solution
Step 1
1. Present Value is the amount of money we invest today. Since it is semi annually the rate of interest will be divided by 2 and the number of years will be calculated on 10 periods at 2.5% rate of interest.
By looking periods and rate in present value of an annuity table, the intersection gives present value of 8.7521
Present Value=Ordinary Annuity x table value
=$20,000 x 8.7521
=$175,042
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