Revision as of 00:28, 5 December 2023 by Admin (Created page with "'''Solution: D''' <math display = "block"> \begin{aligned} & P V_1=\frac{1}{1+3.5 \%}=0.9662, P V_2=\frac{1}{(1+3 \%)^2}=0.9426 \\ & \text { From } P V_3 \text { on, sum PV }=1 /(1+4 \%)^3+1 /(1+4 \%)^4+\ldots \\ & =\frac{1}{(1+4 \%)^2}\left(\frac{1}{1.04}+\frac{1}{1.042}+\frac{1}{1.043} \ldots\right) \\ & =\frac{1}{(1+4 \%)^2} \times \frac{1}{0.04}=23.1139 \end{aligned} </math> Therefore the total = 25.02268 '''References''' {{cite web |url=https://alo.mit.edu/wp-c...")
Exercise
Dec 05'23
Answer
Solution: D
[[math]]
\begin{aligned} & P V_1=\frac{1}{1+3.5 \%}=0.9662, P V_2=\frac{1}{(1+3 \%)^2}=0.9426 \\ & \text { From } P V_3 \text { on, sum PV }=1 /(1+4 \%)^3+1 /(1+4 \%)^4+\ldots \\ & =\frac{1}{(1+4 \%)^2}\left(\frac{1}{1.04}+\frac{1}{1.042}+\frac{1}{1.043} \ldots\right) \\ & =\frac{1}{(1+4 \%)^2} \times \frac{1}{0.04}=23.1139
\end{aligned}
[[/math]]
Therefore the total = 25.02268
References
Lo, Andrew W.; Wang, Jiang. "MIT Sloan Finance Problems and Solutions Collection Finance Theory I" (PDF). alo.mit.edu. Retrieved November 30, 2023.