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Hi everyone, I am stuck with this question on annuity, which requires some properties I am not sure of.
The question assumes a constant interest rate.
Given that:
1) the PV of an annuity due to in N periods is 12.
2) the PV an annuity due in 2N periods is 21
Compute the present value of an annuity IMMEDIATE in 4N periods.
I am compeltely confused, and do not know where to start, except that (1)*(1+i) = (2)...
Is there a difference between "annuity due" and "annuity IMMEDIATE" ?
Please give YOUR definition of annuity.
An annuity immediate for n periods is n payments when the payments at the end of the period. Hence the present value of an annuity IMMEDIATE is the value one period before the first payment.
An annuity due of n payments has n payments at the beginning of the period. Hence the present value of an annuity DUE is the value at the time of the first payment.
Well, so am I!Quote:
Originally Posted by KelvinScale
Never seen anything so weird...
i know youve already tried to do this but can you describe exactly what you think this means. ie list the cashflows and when they occur.Quote:
1) the PV of an annuity due to in N periods is 12.