Trish receives $480 on the first day of each month. Josh receives $480 on the last...

Trish receives $480 on the first day of each month. Josh receives $480 on the last day of each month. Both Trish and Josh will receive monthly payments for next 3 years. At a 9.5 percent annual rate, compounded monthly, what is the highest present value amount?

Expert Solution

Ans Highest Present value is $ 1318.68 of TRISH

P =	Periodic Payments
r =	rate of interest
n =	no of periods

JOSH
Annuity PV Factor (End of Period) =	P [ 1 - ( 1 + r )^-n ]
	r

	480* ( 1 - ((1 / (1 + 9.5%)^3)))
	9.5%

	114.4061513
	0.095

	1204.28

TRISH
Annuity PV Due (Beginning)=	P + ( P [ 1 - ( 1 + r )^-(n-1) ] / r )


	480 + 480 * ( 1 - ((1 / (1 + 9.5%)^(3-1))))/ (9.5%)


	1318.68

jeff jeffy answered 3 years ago

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