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Question : An annuity pays $100 at the end of each period for 10 periods. Set up the CFs in an Excel spreadsheet as follows: 1 2 3 4 5 6 8 9 10 100 100 100 100 100 100 100 100 100 100 For these cash flows the appropriate discount rate is 6%. What is the PV of this series of cash flows? Solve the problem using the following approaches: a. Estimate the PV as the sum of the PVs of each of the CFs. b. Use the annuity formula. c. Use the excel built-in function PV.

Question : An annuity pays $100 at the end of each period for 10 periods. Set up the CFs in an Excel spreadsheet as follows: 1 2 3 4 5 6 8 9 10 100 100 100 100 100 100 100 100 100 100 For these cash flows the appropriate discount rate is 6%. What is the PV of this series of cash flows? Solve the problem using the following approaches: a. Estimate the PV as the sum of the PVs of each of the CFs. b. Use the annuity formula. c. Use the excel built-in function PV.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question : An annuity pays $100 at the end of each period for 10 periods. Set up the CFs in an Excel spreadsheet as follows: 1 4 6. 7 8. 9. 10 100 100 100 100 100 100 100 100 100 100 For these cash flows the appropriate discount rate is 6%. What is the PV of this series of cash flows? Solve the problem using the following approaches: a. Estimate the PV as the sum of the PVs of each of the CFs. b. Use the annuity formula. C. Use the excel built-in function PV.
Transcribed Image Text:Question : An annuity pays $100 at the end of each period for 10 periods. Set up the CFs in an Excel spreadsheet as follows: 1 4 6. 7 8. 9. 10 100 100 100 100 100 100 100 100 100 100 For these cash flows the appropriate discount rate is 6%. What is the PV of this series of cash flows? Solve the problem using the following approaches: a. Estimate the PV as the sum of the PVs of each of the CFs. b. Use the annuity formula. C. Use the excel built-in function PV.
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