An asset pays 50 every six months for 20 years There is a si

An asset pays $50 every six months for 20 years. There is a single additional cash flow of $1000 at the end of 20 years. Using an interest rate of 8%, what is the present value of the asset? a. $634.86 b. $642.26 c. $1,135.90 d. $1,197.93 e. $1,215.62

Solution

Correct option is > d. $1,197.93

Using financial calculator BA II Plus - Input details:

#

I/Y = Yield = Rate/2 =

4.00

FV = Future Value =

-$1,000

N = Number of payments =

40

PMT = Payments =

-$50.00

CPT > PV = Present Value =

$1,197.93

Using financial calculator BA II Plus - Input details:	#
I/Y = Yield = Rate/2 =	4.00
FV = Future Value =	-$1,000
N = Number of payments =	40
PMT = Payments =	-$50.00
CPT > PV = Present Value =	$1,197.93