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an investor is to receive an annuity of $19260 for six years commencing at the end of year 1. It has a present value of $86400.
what is the rate of interest??
using the formula.. i’m getting confused 🙁
You don’t need to use the formula.
19260 x annuity discount factor = PV of 86400
So the annuity discount factor for 6 years must equal 86400/19260 = 4.486.
So go to the tables and look along the 6 year row and see which rate of interest gives an annuity factor of 4.486.
it’s 9% 🙂
it is sooo simple ^^
thank you again sir 😀
hope tomorrow the paper will be easy for me 🙂
hi John sir 🙂
i think i did well in my f2 paper today.. just got some doubt in questions involving incremental cots :/
but overall i’m expecting a pass in f1 f2 and f3 paper.. results in August 🙂 😀
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