Asked by Shahmeer Anwar
What would be the value of security which will pay you Rs. 10000, 11000, 13000, 14000, 15000 in next 5 years . Prevailing interest rate is 11%.
Answers
Answered by
mathhelper
I will assume that the given amounts correspond to payouts at the end of year 1, year 2, etc
present value = 1000(1.11)^-1 +11000(1.11)^-2 + ... + 15000(1.11)^-5
= ...
present value = 1000(1.11)^-1 +11000(1.11)^-2 + ... + 15000(1.11)^-5
= ...
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