The present value of four $10,000 semiannual payments invested for 2 years at 12% compounded semiannually is $43,746.(PV of $1,FV of $1,PVA of $1,and FVA of $1) (Use appropriate factor(s)from the tables provided.) \bold{ ext{(Use appropriate factor(s)from the tables provided.)}} (Use appropriate factor(s)from the tables provided.)

Question

The present value of four $10,000 semiannual payments invested for 2 years at 12% compounded semiannually is $43,746.(PV of $1,FV of $1,PVA of $1,and FVA of $1)  (Use appropriate factor(s)from the tables provided.) \bold{	ext{(Use appropriate factor(s)from the tables provided.)}} (Use appropriate factor(s)from the tables provided.)

Abhiman Singh Basnet · Accepted Answer

Final Answer : False, Explanation :   The present value of an annuity (PVA) can be calculated using the formula   P V A = P M T × [ 1 − ( 1 + r ) − n r ] PVA = PMT 	imes \left[\frac{1 - (1 + r)^{-n}}{r}ight] P V A = PMT × [ r 1 − ( 1 + r ) − n ​ ]  , where PMT is the payment amount, r is the interest rate per period, and n is the total number of periods. Given a semiannual interest rate of 6% (12% annual rate divided by 2) and 4 total payments (2 years times 2 payments per year), the present value would not equal $43,746 when calculated correctly.

The present value of four $10,000 semiannual payments invested for 2 years at 12% compounded semiannually is $43,746.(PV of $1,FV of $1,PVA of $1,and FVA of $1) $provided.)\bold{\text{(Use appropriate factor(s)from the tables provided.)}}$

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