10 chapter 4 table 42 time value of money 147 the long

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Unformatted text preview: na (2) Present value [(1) (2)] (3) 1 $700 0.926 $ 648.20 2 700 0.857 599.90 3 700 0.794 555.80 4 700 0.735 514.50 5 700 0.681 476.70 Present value of annuity aPresent $2,795.10 value interest factors at 8% are from Table A–2. Using Computational Tools to Find the Present Value of an Ordinary Annuity present value interest factor for an ordinary annuity The multiplier used to calculate the present value of an ordinary annuity at a specified discount rate over a given period of time. Annuity calculations can be simplified by using an interest table for the present value of an annuity, a financial calculator, or a computer and spreadsheet. The values for the present value of a $1 ordinary annuity are given in Appendix Table A–4. The factors in the table are derived by summing the present value interest factors (in Table A–2) for the appropriate number of years at the given discount rate. The formula for the present value interest factor for an ordinary annuity with cash flows that are discounted at i percent for n periods, PVIFAi,n, is9 n PVIFAi,n 1 t1 i)t...
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This document was uploaded on 03/03/2014 for the course MBA BMMF at Open University Malaysia.

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