27 November 2013
The essence is- "I want it today only." I am having no patience to receive these annuities on periodical basis. . The company plans to give you Rs.100000/-pm up to 10 years. Total amount payable to you is Rs 1000000/-. But it can not give you Rs 1000000/- today only as you would be receiving the amount quite earlier. . But you need it today. Then you have to accept lesser. The amount agreed between you and the company is say 800000/-. Then you can say that -800000/ is the PV of Rs. 100000/ Annuity for 10 Years. .
27 November 2013
The current value of a set of cash flows in the future, given a specified rate of return or discount rate. The future cash flows of the annuity are discounted at the discount rate, and the higher the discount rate, the lower the present value of the annuity.
27 November 2013
The current value of a set of cash flows in the future, given a specified rate of return or discount rate. The future cash flows of the annuity are discounted at the discount rate, and the higher the discount rate, the lower the present value of the annuity.
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