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 :(
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annuity
12y ago#1You 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 :D
hope tomorrow the paper will be easy for me :)
12y ago#3You are welcome (and good luck!) :-)
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 :) :D
12y ago#5Thats great :-)
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