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Present Value of an Annuity Determine the present value of $200,000 to be received at the end of each of four years, using an interest rate of 7%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year $ Second Year Third Year Fourth Year Total present value $ b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar. $ c. Why is the present value of the four $200,000 cash receipts less than the $800,000 to be received in the future? The present value is less due to the compounding of interest over the 4 years.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92747453

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