Present value of an ordinary annuity =
Where, P = periodic payment, r=annual interest rate
n = compounding periods.
1. Future value - increase in future value will increase in discounted present value.
2. Ordinary annuity - if we shift from ordinary annuity to annuity due the discounted present value will increase since now one period is less discounted overall.
3. Compounding periods - increase in n (compounding periods) will increase the discounted present value.
4. Interest rate - increase in r (interest rate) will decrease the discounted present value.
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