For each of the following cases, indicate (a) what interest rate columns and (b)
ID: 2523719 • Letter: F
Question
For each of the following cases, indicate (a) what interest rate columns and (b) what number of periods you would refer to in looking up the discount rate.
(1) In Table 3 (Present Value of 1):
Annual Rate
Number of
Years Involved
Discounts
per Year
(a)
(b)
(2) In Table 4 (Present Value of an Annuity of 1):
Annual Rate
Number of
Years Involved
Number of
Payments Involved
Frequency of
Payments
(a)
(b)
Annual Rate
Number of
Years Involved
Discounts
per Year
Explanation / Answer
(1)
(2)
(a) (b) Case A 8% 8 Case B 11% 11 Case C 4.5% (9/2) (semi annual interest payments) 18 (9*2) (semi annual interest payments)