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ex 24.9 finan fm/2

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  • ex 24.9 finan fm/2

    another finan question sorry guys. i am studying on the application of finding the value of an annuity at any date in reference to annuities payable more frequently than interest is convertible. i understand the formulas for regular annuities and how you have to discount back the present value for k periods if the first payment is k periods later than it should be. what i dont get however is this :

    Payments of $400 at the end of each month are made over a ten-year period. Find expressions for
    (a) the present value of these payments two years prior to the first payment;

    so wouldnt we just take the present value of a m = 12 and n = 10 annuity and discount it back 2 years?

    the answer it says is 12*400va angle 10 (12).

    why is it just one v? would it not be 2?

    the next part of the example says find the accumulated value 3 years after the last payment and sensibly (1+i)^3 is attached to the end of the formula where s is replacing a obviously.

  • #2
    400a angle 10 (12) is already the present value one year prior to the first payment.


    • #3
      ah i see it now thank you very much sometimes i get a little tricky on myself