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True/False: The present value of four $10,000 semiannual payments invested for 2 years at 12% compounded...

True/False:

The present value of four $10,000 semiannual payments invested for 2 years at 12% compounded semiannually is $43,746

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Answer #1

False

Working:

Semi annual compounding rate = 12%/2 = 6%
Semi annual period Cash flow Discount factor Present Value
1 $       10,000 0.943396 $       9,434
2           10,000 0.889996           8,900
3           10,000 0.839619           8,396
4           10,000 0.792094           7,921
Total Present Value         34,651
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