By the definition of regular annuities, where the first paymentstarts one period in the future or at the end of the current year, by reverse logic, thisimplies that the PVA is one period from the first payment.What this means is that thePVA is in period 2, i.e., one period prior to the first payment.This implies we have todiscount this annuity from period 2 to period 0 as follows:PV = 100 / (1.12) + 150 / (1.12)2+ 325[1 – (1.12)-6/ .12] / (1.12)2= $1274.08Note that21.1336$12.)12.1(13256and we then discount this two periods.Now,we can combine the two terms, the 150 and the annuity value of 1336.21 over onecommon denominator discounting for 2 periods:08.1274$12121.13361501211002..PVThis will be used later in the semester, not now, but you should try to understand this.2) Financial Calculator:Use the cash flow keys (make sure you hit 2ndand C ALL andhave no BEGIN in screen)PeriodCF0123-8This last step means I am putting in a $325 Cash Flow and the Number (Nj) of these cashflows are 6.Note, that I could have just hit the CF button 6 times after typing in the 325.This is what I normally do because I usually forget the sequencing of these things andhave to experiment.After entering the cash flows enter the interest rate: 12, i/yrNow hit the Net Present Value (NPV) key, which is the 2ndand then theNPVPRCbuttonNPV = $1274.08Calculating Interest Rates16