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An individual is to receive an annuity of $5000 for ten years, at the end of each year.
The present value of the annuities is $33550. what is the cost of capital (r) ?need answer asap!
To get the PV you would multiply 5000 by the 10 year cumulative discount factor
Therefore, 10 year cumulative discount factor = 33,550/5,000 = 6.71
Look in body of your cumulative discount tables, going along the 10-year figures until you get as close as you can to 6.71. Then read off the discount rate.
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