CF PV =! PV = the present value of an ordinary annuity (aka: finite series...
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CF PV =! PV = Σ the present value of an ordinary annuity (aka: finite series of cash flows): CF (1+r)i (I) (II) CF CF Σ₁=1 (1+r)i With CF > 0 and 0 <r < 1. We know that PV = converges to PV y" n approaches ∞o. Create a numerical example to show that this is so and explain the relevance of this convergence with respect to the estimation of financial asset valuation. = as CF PV =! PV = Σ the present value of an ordinary annuity (aka: finite series of cash flows): CF (1+r)i (I) (II) CF CF Σ₁=1 (1+r)i With CF > 0 and 0 <r < 1. We know that PV = converges to PV y" n approaches ∞o. Create a numerical example to show that this is so and explain the relevance of this convergence with respect to the estimation of financial asset valuation. = as
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The formula for the present value of an ordinary annuity is as follows PV CF 1rn Where PV represents ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
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