Problem 6.39 – Annuity Value Calculation with Discount Rate Change Analysis

Fundamentals of Corporate Finance

Ross, Westerfield, and Jordan

13th Edition

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Calculate the present value of an annuity consisting of 13 annual payments of $10,000 each, assuming a discount rate of 10% per year. Evaluate the impact of a sudden change in the discount rate on the value of the annuity, assuming the discount rate drops to 5% and rises to 15%. (Your numbers will vary)

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