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Sir there is question in bpp kit what’s the pv of then annual payments of 700 the first paid immediately and discounted at 8% giving your answer to nearest
Correct is 5073
My answer coming 4690
Bcz I did according to text and formula
700 * 6.710 (AF)
Why are they using 9 yr annuity and add 1
Annuity factors always apply to annuities that start in 1 years time.
Here, there is also 700 payable immediately and the present value of 700 payable now is 700.
(I do explain this in my free lectures on discounting).