The annual discount rate is 14.9%. Assuming monthly cashflow, what is the PV factor in period 19? Provide your answer in four decimal points (for example 25.25%=0.2525).

To calculate the Present Value (PV) factor for a given period with monthly cashflows, you can use the following formula:

\[
\text{PV Factor} = \frac{1}{(1 + r)^n}
\]

Where:
- \( r \) is the monthly discount rate.
- \( n \) is the period number (in this case, period 19).

First, we need to convert the annual discount rate to a monthly discount rate:

\[
r = \frac{14.9\%}{12} = \frac{0.149}{12} \approx 0.01242
\]

Now, calculate the PV factor for period 19:

\[
\text{PV Factor} = \frac{1}{(1 + 0.01242)^{19}}
\]

Let's calculate this.The Present Value (PV) factor for period 19, given an annual discount rate of 14.9% and assuming monthly cashflows, is approximately **0.7910** when rounded to four decimal places.

Would you like more details or have any questions about this? Here are five related questions that might interest you:

1. How does the PV factor change if the discount rate is compounded quarterly instead of monthly?
2. What would be the PV factor for period 60 with the same discount rate?
3. How do you calculate the PV of an annuity using the PV factor?
4. How would a change in the discount rate impact the PV factor for period 19?
5. What is the future value (FV) factor, and how is it related to the PV factor?

**Tip:** The Present Value (PV) factor decreases as the period increases, reflecting the concept that money loses value over time due to the discount rate.

Learn how to calculate the Present Value (PV) factor for period 19 with a 14.9% annual discount rate and monthly cashflows. Understand the formula and steps involved in determining the PV factor, crucial for financial calculations.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation