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Imran says

Hey John, in annuity, i just wanted to knew if there was an easier way of calculating the

“total Annuity discount factor” i kind of calculate each and every year one by one and then total them all, it is really lengthy and exhausting. any idea? and thanks the lectures are just awesome!

johnmoffat says

You are given the annuity factors table in the exam (they are printed at the beginning of our course notes, along with the normal present value tables)

Max Huelber says

hi John;

i’d like to thank you for this lecture .it is very helpfull ..

ive been trought some of the videos but i still dint get the 0.893 in this video above or on the payback period video the 0.909 figure.. could you kindly explain that to as im getting stucked on that.. thks MAX

johnmoffat says

Have you looked at the answers to the examples at the end of the Course Notes?

Max Huelber says

nope…where do i find it??? im new to this ….thks

johnmoffat says

If you look just above the lecture, on the right, you will see a link to the download the Course Notes.

As it says, you need these to be able to follow the lectures.

At he back of the Course Notes you will find answers to all of the examples.

Neil says

Hi John,

Quick question about perpetuities. I know how to calculate a perpetuity that starts now, but in a practice exam it said that payments would begin in 4 years time. Do I need to discount for years 1-3 and if so, how would I do that?

Thanks for your help.

johnmoffat says

There two ways that both give the same answer.

Either use 1/r for the perpetuity, and then discount for a further three years using the normal discount factor for three years.

Or

Use 1/r for the perpetuity, and then subtract the three year annuity discount factor ( so as to be left with 4 to infinity)

Both will give the same answer. (Except for rounding difference)