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Calculate the following Present Value and note the relationships between the Present Value and discount rates and the length of time the payment is received.
Calculate the following Present Value and note the relationships between the Present Value and discount rates and the length of time the payment is received. Present Value of an Annuity (PVA): todays value of a series of equal future cash flows
Years invested remains at 5 years; the discount rate changes
- PVA of $100 received each year at 3% for 5 years:
- PVA of $100 received each year at 5% for 5 years:
- PVA of $100 received each year at 7% for 5 years:
- As the discount rate increases, the PVA _________________.
The discount rate remains at 3%; the years invested changes
- PVA of $100 received each year at 3% for 5 years:
- PVA of $100 received each year at 3% for 10 years:
- PVA of $100 received each year at 3% for 15 years:
- As the length of time the money is received increases, the PVA _________________.
What's the major difference of the two parts?
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