You have instructed the bank to make a payment from your deposit in installments of $400 per year at the end of each year (a regular annuity). The total period of these payments lasts 4 years. If you had not withdrawn this money from the account, it would continue to accrue compound interest at a rate of 4% per annum, compounded annually.
A) calculate the present value of this cash flow. Use Excel PV function and mathematical formula to double check.
B) How would the present value of the cash flow change if it were an annuity due? Calculate in two ways, in Excel and mathematically.