Assignment Discounting

Published by Mario Oettler on

Task

The following series of cash flows is given:

t0t1t2t3t4
100100100100100

Calculate the present value (PV) if the interest rate is

  1. 10%
  2. 35%

Solution

  1. PV = 100 *1,1^0+ 100*1,1^-1+100*1,1^-2+100*1,1^-3+100*1,1^-4 = 416.99
  2. PV = 100*1,35^0 + 100*1,35^-1+100*1, 35^-2+100*1, 35^-3+100*1, 35^-4 = 299.69
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