Question

Find the present value of a series of investment of $1 at the end of each year for 25 years with effective

interest rate of 13.5% p.a.

Answer 1

$=P[\frac{1 - (1 +r) ^{-n}} {r}]$

$=\$1[\frac{1 - (1 +0.00135) ^{-25}} {0.00135}]$

$=\$1 [\frac{1 - (1.00135) ^{-25}} {0.00135 }]$

$=\$1 [\frac{1 - (1 - 0.967)} {0.00135 }]$

$=\$1 (24.44)$

Present Value =$\$24.44$