The annual cash flows for year 1 is $500; year 2 is $400; and year 3 is $300. The opportunity cost is 7.5%. Present value of an annuity is the current value of future payment or the present value of a series of future periodic payments made at the end of each payment period. P V = P M T 1 ( 1 + r ) 1 + P M T 2 ( 1 + r ) 2 + P M T 3 ( 1 + r ) 3 Present value of an annuity due is the current value of future payment or the present value of a series of future periodic payments made at the beginning of each payment period. P V = P M T 1 ( 1 + r ) 0 + P M T 2 ( 1 + r ) 1 + P M T 3 ( 1 + r ) 2 Here, The present value is “ PV ”. The annual payment on investment is “ PMT ”. The interest rate is “ r ”.

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Answer 1

Question

Chapter 4, Problem 15PROB

Summary Introduction

The annual cash flows for year 1 is $500; year 2 is $400; and year 3 is $300. The opportunity cost is 7.5%.

Present value of an annuity is the current value of future payment or the present value of a series of future periodic payments made at the end of each payment period.

PV=PMT1(1+r)1+PMT2(1+r)2+PMT3(1+r)3

Present value of an annuity due is the current value of future payment or the present value of a series of future periodic payments made at the beginning of each payment period.

PV=PMT1(1+r)0+PMT2(1+r)1+PMT3(1+r)2

Here,

The present value is “PV”.

The annual payment on investment is “PMT”.

The interest rate is “r”.

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Answer 2

Question

Chapter 4, Problem 15PROB

Summary Introduction

The annual cash flows for year 1 is $500; year 2 is $400; and year 3 is $300. The opportunity cost is 7.5%.

Present value of an annuity is the current value of future payment or the present value of a series of future periodic payments made at the end of each payment period.

PV=PMT1(1+r)1+PMT2(1+r)2+PMT3(1+r)3

Present value of an annuity due is the current value of future payment or the present value of a series of future periodic payments made at the beginning of each payment period.

PV=PMT1(1+r)0+PMT2(1+r)1+PMT3(1+r)2

Here,

The present value is “PV”.

The annual payment on investment is “PMT”.

The interest rate is “r”.

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Answer 3

Question

Chapter 4, Problem 15PROB

Summary Introduction

The annual cash flows for year 1 is $500; year 2 is $400; and year 3 is $300. The opportunity cost is 7.5%.

Present value of an annuity is the current value of future payment or the present value of a series of future periodic payments made at the end of each payment period.

PV=PMT1(1+r)1+PMT2(1+r)2+PMT3(1+r)3

Present value of an annuity due is the current value of future payment or the present value of a series of future periodic payments made at the beginning of each payment period.

PV=PMT1(1+r)0+PMT2(1+r)1+PMT3(1+r)2

Here,

The present value is “PV”.

The annual payment on investment is “PMT”.

The interest rate is “r”.

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Answer 4

Question

Chapter 4, Problem 15PROB

Summary Introduction

The annual cash flows for year 1 is $500; year 2 is $400; and year 3 is $300. The opportunity cost is 7.5%.

Present value of an annuity is the current value of future payment or the present value of a series of future periodic payments made at the end of each payment period.

PV=PMT1(1+r)1+PMT2(1+r)2+PMT3(1+r)3

Present value of an annuity due is the current value of future payment or the present value of a series of future periodic payments made at the beginning of each payment period.

PV=PMT1(1+r)0+PMT2(1+r)1+PMT3(1+r)2

Here,

The present value is “PV”.

The annual payment on investment is “PMT”.

The interest rate is “r”.

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Answer 5

Chapter 4, Problem 15PROB

Summary Introduction

The annual cash flows for year 1 is $500; year 2 is $400; and year 3 is $300. The opportunity cost is 7.5%.

Present value of an annuity is the current value of future payment or the present value of a series of future periodic payments made at the end of each payment period.

PV=PMT1(1+r)1+PMT2(1+r)2+PMT3(1+r)3

Present value of an annuity due is the current value of future payment or the present value of a series of future periodic payments made at the beginning of each payment period.

PV=PMT1(1+r)0+PMT2(1+r)1+PMT3(1+r)2

Here,

The present value is “PV”.

The annual payment on investment is “PMT”.

The interest rate is “r”.

Answer 6

Chapter 4, Problem 15PROB

Summary Introduction

The annual cash flows for year 1 is $500; year 2 is $400; and year 3 is $300. The opportunity cost is 7.5%.

Present value of an annuity is the current value of future payment or the present value of a series of future periodic payments made at the end of each payment period.

PV=PMT1(1+r)1+PMT2(1+r)2+PMT3(1+r)3

Present value of an annuity due is the current value of future payment or the present value of a series of future periodic payments made at the beginning of each payment period.

PV=PMT1(1+r)0+PMT2(1+r)1+PMT3(1+r)2

Here,

The present value is “PV”.

The annual payment on investment is “PMT”.

The interest rate is “r”.

Answer 7

Chapter 4, Problem 15PROB

Summary Introduction

The annual cash flows for year 1 is $500; year 2 is $400; and year 3 is $300. The opportunity cost is 7.5%.

Present value of an annuity is the current value of future payment or the present value of a series of future periodic payments made at the end of each payment period.

PV=PMT1(1+r)1+PMT2(1+r)2+PMT3(1+r)3

Present value of an annuity due is the current value of future payment or the present value of a series of future periodic payments made at the beginning of each payment period.

PV=PMT1(1+r)0+PMT2(1+r)1+PMT3(1+r)2

Here,

The present value is “PV”.

The annual payment on investment is “PMT”.

The interest rate is “r”.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 4 - Prob. 1PROB Ch. 4 - Prob. 2PROB Ch. 4 - Prob. 3PROB Ch. 4 - Prob. 4PROB Ch. 4 - Prob. 5PROB Ch. 4 - Prob. 6PROB Ch. 4 - Prob. 7PROB Ch. 4 - Prob. 8PROB Ch. 4 - Prob. 9PROB Ch. 4 - Prob. 10PROB

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Chapter 4 Solutions