An investment is expected to result in equal payments of $ 14300.00 at the end of each semi-annual period for the next 6 years (ordinary annuity). Compounding: 2 times per year. If the appropriate required rate of return (discount rate) is 12 %, what is the present value of the annuity stream?

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A: Calculation of Present value (PV):

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A: To Find: Future Value

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A: PV: It is the current worth of cash flows that are expected to happen in the future.

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A: In this we have to calculate the present value factor of annuity to get number of years.

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A: Given: Particulars Amount Cash value(PV) $11,300 Payment (PMT) $950 Interest rate 6%

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A: Nominal Interest rate = ((1 + real rate / 12)^6 -1)*2 = (( 1 +14%/12)^6 - 1)*2 = 0.1441474102…

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A: Calculate the present value as follows:

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A: Given information is: Ordinary annuity each year = $2350 Period = 8 years Opportunity Cost = 11%

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A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…

Q: Find the present value of the decreasing annuity necessary to fund a withdrawal of $100 per month…

A: The question gives the following information:

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A: Future value of ordinary annuity = Annual payment x [(1 + i)n - 1]/i