Martha receives $200 on the first of each month.Stewart receives $200 on the last day of each month.Both Martha and Stewart will receive payments for 30 years.The discount rate is 9 percent,compounded monthly.What is the difference in the present value of these two sets of payments?

Question

Quizplus · Accepted Answer

PV_ADue = $200({1 - 1 / [1 + (0.09 / 12)]³⁰^×12} / (0.09 / 12))× [1 + (0.09 / 12)] = $25,042.80 2^nd BGN 2^nd SET 11ea5bb7_de38_0f2d_8724_c90815083b8c_TB1005_00 PV = $200({1 - 1 / [1 + (0.09 / 12)]³⁰^×12} / (0.09 / 12))= $24,856.37 11ea5bb7_de38_363e_8724_c9d91bfdab32_TB1005_00 Difference = $25,042.80 - $24,856.37 = $186.43

Martha Receives $200 on the First of Each Month