An investment will pay $3,600 per year for 10 years, with the first payment occurring today. If
Question:
An investment will pay $3,600 per year for 10 years, with the first payment occurring today. If the interest rate is 7%, what is the value of this investment today?
What would the value of the investment be if the cash flows last 20 years (again, with the first payment today!)? How come the value of the investment IS NOT twice as much? (After all, you will receive twice as much cash in the 20 year annuity: 3600 X 20 vs. 3600 X 10).
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We have A 3600 n 10 and I 7 PV A PVIFA I n 3600 PVIFA ...View the full answer
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Muhammad Umair
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Related Book For 
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
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