Two annuities have equal present values and an applicable discount rate of 7.25 percent. One annuity pays $2,500 on the first day of each year for 15 years. How much does the second annuity pay each year for 15 years if it pays at the end of each year? I was able to calculate the beginning. But I can't calculate the end. The answer shared with me is $2,681.25. N=15; I/Y=7.25%; PMT=2,500; FV=0; FIND PV. ON EXCEL I ENTERED: PV(7.25%, 15, 2,5000, 0, 1) I got $24,039.61 But I put in the same information in excel and change the 1 to a 0 to get the end of the period. PV(7.25%, 15, 2,5000, 0, 0) But I get $22,414.56 so my difference is $24,039.61 - $22,414.56 = $1,625.06 Can you show me how to solve it?
Two annuities have equal present values and an applicable discount rate of 7.25 percent. One annuity pays $2,500 on the first day of each year for 15 years. How much does the second annuity pay each year for 15 years if it pays at the end of each year? I was able to calculate the beginning. But I can't calculate the end. The answer shared with me is $2,681.25. N=15; I/Y=7.25%; PMT=2,500; FV=0; FIND PV. ON EXCEL I ENTERED: PV(7.25%, 15, 2,5000, 0, 1) I got $24,039.61 But I put in the same information in excel and change the 1 to a 0 to get the end of the period. PV(7.25%, 15, 2,5000, 0, 0) But I get $22,414.56 so my difference is $24,039.61 - $22,414.56 = $1,625.06 Can you show me how to solve it?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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I was able to calculate the beginning. But I can't calculate the end. The answer shared with me is $2,681.25.
N=15; I/Y=7.25%; PMT=2,500; FV=0; FIND PV.
ON EXCEL I ENTERED:
PV(7.25%, 15, 2,5000, 0, 1)
I got $24,039.61
But I put in the same information in excel and change the 1 to a 0 to get the end of the period.
PV(7.25%, 15, 2,5000, 0, 0)
But I get $22,414.56
so my difference is $24,039.61 - $22,414.56 = $1,625.06
Can you show me how to solve it?
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