What is the discounted value of $965.00 paid at the end of every month for 9...

Question

Question

What is the discounted value of $965.00 paid at the end of every month for 9 years if interest is 11% per annum compounded qu

business finance

Answer 1

Answer #1

Amount paid monthly = P = $965

Number of payments made = n = 9*12 = 108 months

Monthly interest rate = r = 0.11/12

Hence, Discounted value = PV = P/(1+r) + P/(1+r)² +....+ P/(1+r)ⁿ = P[1- (1+r)^-n]/r = 965[1- (1+0.11/12)^-108]/(0.11/12) = $65979.02

Answer 2

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