In: Finance
Years | Cashflow | Present value calculation | Present value | Duration D = (PV*T) |
0.5 | 50 | 50/(1+4%)^1 | 48.07692308 | 24.04 |
1 | 50 | 50/(1+4%)^2 | 46.22781065 | 46.23 |
1.5 | 50 | 50/(1+4%)^3 | 44.44981793 | 66.67 |
2 | 50 | 50/(1+4%)^4 | 42.74020955 | 85.48 |
2.5 | 50 | 50/(1+4%)^5 | 41.09635534 | 102.74 |
3 | 50 | 50/(1+4%)^6 | 39.51572629 | 118.55 |
3.5 | 50 | 50/(1+4%)^7 | 37.99589066 | 132.99 |
4 | 1050 | 1050/(1+4%)^8 | 767.2247153 | 3068.90 |
Total | 1067.33 | 3645.59 | ||
Macaulay Duration = Duration D / Present value of cashflows | Macaulay Duration =3645.59 / 1067.33 = 3.42 |