Question
how do i get 3.1698
Present VALUE of Anuity factor 76 10% 4 = 120,000 = 37857 120 000 - 37857 3.1698 How Do I get 301698
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Answer #1

The query is regarding the denominator ie., 3.1698.

This value is obtained by looking at the 'Rate Table For the Present Value of an Ordinary Annuity of 1'. In the table we look at 10% column for 4th year. We get the answer as 3.1698

This can also be obtained manually by summing up (1/(1+0.1)1) + (1/(1+0.1)2) + (1/(1+0.1)3) + (1/(1+0.1)4) = 3.1698

This value shows present value of $ 1 invested each annually for 4 years at 10% discount rate. Hence the present value is 3.1698

Hope this helps. Please comment in case of any query regarding the solution.

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