Comments

  1. avatar says

    Hello Sir,

    Question 4 in the test questions asks for the present value of $2000 per annum first receivable in 3 YEARS,but the solutions at the end of the notes calculates the first receipt after 2 YEARS.
    Please could you shed more light on this and give clarity as to why they are different using the different number of years gives different answers. Or am I missing something or got something wrong somewhere? Please help.

    Many thanks.

  2. avatar 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!

  3. avatar 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

  4. avatar 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.

    • Avatar of John Moffat 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)

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