1. Calculate the present value of a stream of cash flows of $ 50000 that an investor will receive for next 20 years at 10% rate of interest?
Here, going by the formula and assuming it's an ordinary annuity, we have:
2. Given an interest rate of 11%, what amount must be deposited annually so that the account will have $ 60000 after 10 years?
o It's a case where the FV of an ordinary annuity is given and we have to calculate the PMT, this can be done by using the FV of an ordinary annuity formula:
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