Читать книгу Fundamentals of Financial Instruments - Sunil K. Parameswaran - Страница 132

Allegra is offering an instrument that promises to pay $4,000 per year for 10 years, beginning one year from now. If the annual rate of interest is 5.40%, and interest is paid annually, what is the present value of the annuity?

We can use the PV function in Excel. The parameters are: Rate = 0.054, Nper = 10, Pmt = –4,000. There is no need to input parameters for Fv and Type. This is because there is no lump-sum terminal cash flow, and so there is no need to input a value for the future value. Type needs to be input only for annuities due.

The future value of this annuity may be computed using the FV function.

Now assume that the above annuities are annuities due. The present and future values may be computed as follows.

And