What is the present value of a 12 year $6,000 annuity due if the discount rate is 10%?
I got 44,970. Am I correct?
What would the present value be if a person received $900 in perpetuity and the interest rate is 16%? I got 5,625. Am I correct?
Thank you for the opportunity to help you with your question!
12 year $ 6000 annuity due
= 6000 sum (k=0 to 11) (1/(1+i)^k)= 6000* (1-1/(1+i)^12)/(1-1/(1+i))
you are right
900/i = 900/.16= 5625
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