Hi,
Can you please explain how you got the DF@10% of 4.170 for period 1-4? I don't fully understand why it isn't just 3.170?
Thanks,
Aoife
Ask the Tutor ACCA FM
Practice Q2. Chapter 9
8y ago#1The flows are not 1 - 4.
The payment are at the start of each year, so the first amount is at time 0.
They are for five years, and so they are from 0 - 5.
The PV of a flow at time zero is 1 x the flow.
The PV of the flows from 1 - 4 is got by multiplying the amount by 3.170.
So the PV of all five flows is got by multiplying the amount by 4.170.
Sign in to reply to this topic.