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Unformatted text preview: formula: PV-OD = 100 [1 (1 + .1) 10 ] PV-OD = 100 (6.144567106) PV-OD = $614.46 3) What would the present value be if it was a 25-year annuity? We would still be using the same equation so we can input the following into the same formula: PV-OD = 100 [1 (1 + .1) 25 ] PV-OD = 100 (9.077040018) PV-OD = $907.70 (4) What would the present value be if this was a perpetuity? If we are given a perpetuity, the formula for its present value shall be this: PV-perpetuity = PMT PV-perpetuity = 100 PV-perpetuity = $1000.00...
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- Summer '11