Question
An investment offers $11,742 per year for 12 years, with the first payment occurring 5 years...
An investment offers $11,742 per year for 12 years, with the first payment occurring 5 years from now. If the required return is 9 percent, what is the value of the investment? (HINT: Remember that when you calculate the PV of the annuity, the claculator gives you the present value of the annuity 1 period before the annuity starts. So if the annuity starts in year 7, that calculator will to give you the persent value of annuity in year 6. Now you have to bring this number to period 0 by inputting: N=6 (1 period before the annuity starts, in your case it would be a different number depending when your annuity starts) R=9 FV=Present value of annuity you found in step 1. And you solve for PV
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Answer #1
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SOLVED WITH BA II PLUS CALCULATOR
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