1 answer

Your annuity grows at 8% per quarter. The first cash payment is $200. What is the...

Question:

Your annuity grows at 8% per quarter. The first cash payment is $200. What is the PV of this growing annuity if the payments are made for 12 quarters and the interest rate is 16%?


Answers

PVOrdinary Annuity = C/((r-g)/(f*100))*(1-((1+g/(f*100))/(1+r/(f*100)))^(n*f))
C = First cash flow
i = interest rate g = growth rate
n = number of payments I f = frequency of payment
PV= 200/((16-32)/(4*100))*(1-((1+32/(4*100))/(1+16/(4*100)))^(3))
PV = 2864.21
.

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