Assuming a discount rate of 6%, what is the present value of 100,000 per year for 12 years if the payments occur at the beginning of each period?   Question 2 options:   $888,687   $729,394   $804,849   $838,384   $789,423

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Assuming a discount rate of 6%, what is the present value of 100,000 per year for 12 years if the payments occur at the beginning of each period?
 

Question 2 options:

 
$888,687
 
$729,394
 
$804,849
 
$838,384
 
$789,423
Expert Solution
Step 1

The payments occur at the beginning of each period is called an annuity due.

Present value of annuity due = Annuity * PVAD of $1

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