Calculate the present value of annuity with 30 annual payment which pays an initial payment of $1,733.35 at the end of 5 years. Each subsequent annual payment is 4% larger than the previous payment. Assume the effective annual interest rate is 0.065. Give your answer to the nearest dollar.

Calculate the present value of annuity with 30 annual payment which pays an initial payment of $1,733.35 at the end of 5 years. Each subsequent annual payment is 4% larger than the previous payment. Assume the effective annual interest rate is 0.065. Give your answer to the nearest dollar.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 20E

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Concept explainers

Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.

Question

Calculate the present value of annuity with 30 annual payments
which pays an initial payment of $1,733.35 at the end of 5
years. Each subsequent annual payment is 4% larger than the
previous payment. Assume the effective annual interest rate is
0.065. Give your answer to the nearest dollar.

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