ANSWERS TO REVIEW QUESTIONS

This formula could be used to find the present value of an annuity due: PVAn(Annuity Due) = PVAn(1 + I). In our situation, the present value of the annuity due is $273.56: PVA3(Annuity Due) = $248.69(1.10)1 = $273.56. The Excel function is = PV(10%,3,-100,0,1). The fourth term, 0, tells Excel there are no additional cash flows. ................
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