e My courses FIN201 Assessments 2 Online quiz techniques r

e My courses / FIN201 / Assessments /2. Online quiz- techniques review (1096) uestion 4 QUI ot yet nswered Find the value on 1 January 2005 of half yearly payments of $635 each over 7 years f the first payment is on 1 July 2007 and interest is j2-1196. Marked out of .00 Answer Flag uestion Finish Time le Next page Previous page Week 2 T218 (3) pptx

Solution

First, we need to find the value on 1 July 2007,

PVA = P[{1 - (1 + r)^-n} / r]

= $635[{1 - (1 + 0.11/2)^-7x2} / 0.11/2]

= $635[{1 - 1.055^-14}/0.055]

= $635[9.5896] = $6,089.43

Now, we can find the value on 1 January 2005,

P₀ = $6,089.43/(1.055)⁵ = $4,659.23