Question

If interest is 4.5% compounded monthly, calculate the present value of five $1,000 monthly payments assuming cash flows at the beginning of the month.

Answer 1

Calculating the Present value of five $1,000 monthly payments using Present Value of annuity due formula:-

Where, C= Periodic monthly Payments =$1,000

r = Periodic Interest rate = 4.5%/12 =0.75%

n= no of periods=5

Present Value = $4,962.78

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