Budgeting 12

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February 3, 2022 at 6:38 pm #648061
laraib.abro
Member
- Topics: 11
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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
February 4, 2022 at 7:48 am #648082
John Moffat
Keymaster
- Topics: 57
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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).
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