Hi sir , if a question states that there is a fifteen year annuity of $300 starting at once. Interest rates are 6%
Does the cashflow of $300 start from
Year 0 - Year 15 ?
OR
Year 0 - Year 14 ?
Ask the Tutor ACCA FM
Annuity
10y ago#1On what you have written it would be 0 - 14
Because the answer key in my complete textbook shows that for this question,
The annuity factor
= 9.295 + 1
= 10.295
When i checked the annuity table,
the 9. 295 is actually for 14 years not 15 years . Thats why.
10y ago#3That is correct.
The discount factor for a flow at time 0 is 1, and the factor for flows from 1 to 14 is the 14 year annuity factor (9.295).
So for flows 0 - 14, the total factor is 1 + 9.295
Sign into reply to this topic.