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Calculate the present value at an annual effective rate of 8% of a 10-year continuously increasing...

Calculate the present value at an annual effective rate of 8% of a 10-year continuously increasing arithmetic annuity. The annuity's payment rate begins at 0 and increases continuously at a rate of 400 per year.

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Answer #1

PMT =400
Number of Years =10
Number of years =9
USing excel formula we get

A B C D E F G H I J
1 Year 1 2 3 4 5 6 7 8 9 10
2 Annuity 400 800 1200 1600 2000 2400 2800 3200 3600 4000 SUM
3 PV of Annuity 369.25 681.72 943.95 1161.84 1340.64 1485.08 1599.39 1687.34 1752.31 1797.32 12818.82
Excel formula A2/EXP(A1*8%) B2/EXP(B1*8%) C2/EXP(C1*8%) D2/EXP(D1*8%) E2/EXP(E1*8%) F2/EXP(F1*8%) G2/EXP(G1*8%) H2/EXP(H1*8%) I2/EXP(I1*8%) J2/EXP(J1*8%)

Answer is 12818.82

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