Problem 2.8 You make a deposit now into an account earning 6\% annually in return for a payment of 250 at the end of each of the next 8 years. What should you deposit today?
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To calculate the present value of the future payments, we need to discount each payment back to the present using the interest rate of 6% annually. PV = Payment / (1 + interest rate)^n Where: PV = Present Value Payment = 250 (payment at the end of each Show more…
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