Present value of annuity due with payments increasing by 100
Hi,
We have to solve this problem for class:
What is the present value of annuity due when each payment is $100 higher than the previous one?
The first payment is $10.000, annual interest rate: 5 %, the payment period as well as the interest period is 4 months (EDIT: it's 3 months) and the payments are going to be coming in for 15 years. (EDIT: this is an annuity due)
So I figured out I need to find the quotient and then use it for calculating the sum of the payment's present value as geometric sequence.
The value of P1 is obviously 10.000
Is P2 = 10.000 * 1/(1+0,0125) + 100 or P2 = (10.000 + 100) * 1/1+(1+0,0125) ? Furthermore, what would P3 be then? And is this approach even correct?
(I hope the terms and symbols are correct (EDIT: they were not ) - I am not a native English speaker, but I tried my best when translating them)
Hi,
We have to solve this problem for class:
What is the present value of annuity due when each payment is $100 higher than the previous one?
The first payment is $10.000, annual interest rate: 5 %, the payment period as well as the interest period is 4 months (EDIT: it's 3 months) and the payments are going to be coming in for 15 years. (EDIT: this is an annuity due)
So I figured out I need to find the quotient and then use it for calculating the sum of the payment's present value as geometric sequence.
The value of P1 is obviously 10.000
Is P2 = 10.000 * 1/(1+0,0125) + 100 or P2 = (10.000 + 100) * 1/1+(1+0,0125) ? Furthermore, what would P3 be then? And is this approach even correct?
(I hope the terms and symbols are correct (EDIT: they were not ) - I am not a native English speaker, but I tried my best when translating them)
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