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Example 2 . 1 4 : Calculating the present value of an annuity due at 1 2 % An investor wants to buy an annuity

Example 2.14: Calculating the present value of an annuity due at 12%
An investor wants to buy an annuity of R100 for the next three years, each instalment being paid at the beginning of the year. If a bank is prepared to pay interest at 12%, how much must be invested today?
It can be seen that the amount will be invested and the first instalment will immediately be repaid. It can be illustrated as shown in Table 2.6.
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