Determine the value of EUAW of $3,750 received in year 0 and a year after begins...

Determine the value of EUAW of $3,750 received in year 0 and a year after begins to yield $1,000 a year for 6 years at an interest of 10%

Solutions

Expert Solution

First we need to find the PV of the annuity of 1000.
Then we need to add it to the 3750
Then we find the PMT or the EUAW of the resultant value

We are given the following information:

Annuity payment	PMT	$ 1,000.00
Rate of interest	r	10.00%
Number of years	n	6
Present value	PV	To be calculated

We need to solve the following equation to arrive at the required PV

So the PV of the annuity is $4355.26

Adding this to 3750 we get $8,105.26

Now we can calculate the EUAW:

We are given the following information:

EUAW	To be calculated
r	10.00%
n	6
frequency	1
PV	$ 8,105.26

We need to solve the following equation to arrive at the required EUAW:

jeff jeffy answered 1 year ago

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