Calculate the pv of this residual value of annuity

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Reference no: EM132054547

Use all the information to calculate the pv of residual value in 2010.in 2010 jimmy want to buy a house in 2025.during this 15 years,the price of this property increased by the discount rate as follow,1 to 5 years by 8% p.a ,6 to 10 by 10% p.a,11 to 15 by 15% p.a.In 2025,he get this house,but after next 8 years, he sell the house.From 2025 to 2033,the house will increase price by the different rate,in first three years,the house will increase by 5% p.a.compound quarterly. In years 4 to years 7,the house will increase by 8% p.a compound semi-annually.in year 8,means in 2033,the house will increase by 18% monthly.From 2034 to 2041,jimmy use the net sale of selling the house to buy the annuity,assume that the net sale of house is 2.8 millions.the cash flow of annuity is monthly payment,APR is 8%p.a.compound monthly.and we know the residual value of this annuity is 1.4 millions. please calculate the PV of this residual value of annuity =1.4million in 2010. Assume that you know the discount rate is 8% p.a.

I confuse whether i need to consider the frequency ,because it seems that from 2010 to 2033,the cash flow is annually,but 2034 to 2041 ,the cash flow is monthly payment.if I don’t consider about the frequency.i just use 1.4 million discount back to 2010 use discount rate 8% and total term is 31 to calculate the PV of residual value in 2010.

Reference no: EM132054547

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