question archive Your scholarship pays you 3,000BD at the end of every year
Your scholarship pays you 3,000BD at the end of every year
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Your scholarship pays you 3,000BD at the end of every year. It lasts for 7 years Your required return is 8%. The government offers you a lump sum of 13,000 now in exchange for your yearly scholarship. Should you take their offer?
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| PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)] |
| C = Cash flow per period |
| i = interest rate |
| n = number of payments |
| PV= 3000*((1-(1+ 8/100)^-7)/(8/100)) |
| PV = 15619.11 |
| Using Calculator: press buttons "2ND"+"FV" then assign |
| PMT =3000 |
| I/Y =8 |
| N =7 |
| FV = 0 |
| CPT PV |
| Using Excel |
| =PV(rate,nper,pmt,FV,type) |
| =PV(8/(100),7,,PV,) |
