Returns level stream of four annual payments

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Reference no: EM132057839

Consider an investment scenario that returns a level stream of four annual payments of $10,000 each (i.e., an annuity). The first payment occurs at the end of the first year, and the subsequent payments occur at the end of each of the next three years. The discount rate is assumed to be 6% annually.

Using the present value tables, calculate how your answer would differ if you change the assumption to eight semiannual (end of period) $5,000 payments, with the 6% annual rate being revised to 3% for each semiannual period?

Reference no: EM132057839

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