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- 2013-8-19
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#19 on Schweser Exam 1 morning session.
Q:An investor wants to receive $10,000 annually for ten years with the first payment 5 years from today. If the investor can earn 14% annual return, the amount she will have to invest today is closest to:
A. 27,091
B. 30,884
C. 52,161
A:This problem involves determining the present value of an annuity followed by finding the present value of a lump sum. Enter PMT = 10,000, N = 10, and I = 14. Compute PV = 52,161.16. That is the present value of the 10year annuity, four years from today. Next, we need to discount that back to present for four years to find the amount of the investment today. Enter FV = ?52,161.16, N = 4, I = 14, PMT = 0. Compute PV = 30,883.59.
My question is about drawing the timeline Do you start at #0 or #1. “4 years from today” at 0 would bring you to year 4 and year 5 for starting at #1.
This really throws me off in getting the right answer any tips on how to draw the timeline for this one? |
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发表于 2013-4-1 12:17
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