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Can you explain what formula I need to use? Thanks :) As a citizen of Taiwan where 'Taipei 101' was once the tallest building in
Can you explain what formula I need to use? Thanks :)
As a citizen of Taiwan where 'Taipei 101' was once the tallest building in the world from 2004 to 2010, Steve's favourite number is 101. He passed ACST101 Finance 1A last session and found the unit to be terribly boring. Fortunately, his learning did not stop with passing the unit. Recently, he came up with an idea for calculating the present value of a special annuity. The annuity will pay $1, $0 and $1 at the end of each of the next 3 years, respectively. This special payment stream will then repeat for another 9 times (i.e., 10 times in total) in 3-year periodic intervals, such that the last payment of $1 will be 30 years from now. It is known that the effective annual rate is 5%. (a) Calculate the present value of this special annuity if the special payment stream is only occurring once, that is, there are payments of $1 are at the end of year 1 and year 3 only. (1 mark)
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