Question

A document stipulates semiannual payments of $ 17MM, for 5 years. If this document is canceled with a single payment of:

a) At the beginning
b) In the end,

Find a and b, assuming an interest of 17% C.T.

Answer 1

r = 17%/2 = 0.085

n = 5 * 2 = 10 payments

a) We need to find the present value of these semi-annual payments

Single payment of $111.542917 MM at the beginning

b) We need to find the future value of these semi-annual payments

Single payment of $252.19668838 MM in the end

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