An amount of 100,000 was borrowed and was to be repaid in 10 instalments at the end of every quarter thereafter with each payment more than $1,000 more than the preceding, if interest is 12% compounded semi-annually,(a) determine the amount of the first payment and (b) the total amount paid by the borrower. DRAW THE CASH FLOW DIAGRAM.

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.