August 04, 2022/ Steven Bragg
A present value of 1 table states the present value discount rates that are used for various
combinations of interest rates and time periods. A discount rate selected from this table is then multiplied by a cash sum to be received at a future date, to arrive at its present value. The interest rate selected in the table can be based on the current amount the investor is obtaining from other investments, the corporate
cost of capital, or some other measure. Thus, if you expect to receive a payment of $10,000 at the end of four years and use a discount rate of 8%, then the factor would be 0.7350 (as noted in the table below in the intersection of the "8%" column and the "n" row of "4". You would then multiply the 0.7350 factor by $10,000 to arrive at a present value of $7,350. A present value of 1 table that employs a standard set of interest rates and time periods appears next. Present Value of 1 Table
How do you calculate present value of annuity with discount rate?The formula for determining the present value of an annuity is PV = dollar amount of an individual annuity payment multiplied by P = PMT * [1 – [ (1 / 1+r)^n] / r] where: P = Present value of your annuity stream. PMT = Dollar amount of each payment. r = Discount or interest rate.
How do you calculate the annuity factor?The annuity factor is calculated by taking the present value of the annuity and dividing it by the number of payments that will be made. This calculation can be done using a simple online calculator. All you need to do is input the amount of money that will be paid, the interest rate, and the number of payments made.
What is the present value of a 3 year annuity of $100 if the discount rate is 6 %?Applying the formula, the present value of the annuity is: 100(1−(1+6%)−3)6%=267.30.
What is the 2 year annuity factor if the required rate of return is 10%?If the required rate of return is 10%, then the 2-year annuity factor can be calculated as 1.7355.
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What is the eight year present value annuity factor at a discount rate of 11 percent
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