Find the present value of a 3-year, $20,000 ordinary annuity deposited into an account that pays 12%
Question:
a. As three single cash flows discounted at the stated annual rate of interest
b. As three single cash flows discounted at the appropriate effective annual rate of interest
c. As a 3-year annuity discounted at the effective annual rate of interest
Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...
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Related Book For
Introduction to Corporate Finance What Companies Do
ISBN: 978-1111222284
3rd edition
Authors: John Graham, Scott Smart
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