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Homework answers / question archive / Five years ago, you paid for the right to receive twelve OMR 26

Five years ago, you paid for the right to receive twelve OMR 26

Finance

Five years ago, you paid for the right to receive twelve OMR 26.750 annual end-of-the-year cath flows. It discounting the cash flows at an annual cate of what did you pay for these cash flows back then? Select one a OMR 194,924.17 OM 217.09.08 SOMR22:1716 OMR35,732 OMR111 01150

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Present value of the Ordinary annuity

Annual payment (P) = OMR 26,750

Annual interest rate (r) = 5.00% per year

Number of periods (n) = 5 Years

Present Value of an Ordinary Annuity = P x [{1 - (1 / (1 + r) n} / r]

= OMR 26,750 x [{1 - (1 / (1 + 0.05)5} / 0.05]

= OMR 26,750 x [{1 - (1 / 1.276281563)} / 0.05]

= OMR 26,750 x [{1 - 0.783526166} / 0.05]

= OMR 26,750 x [0.216473834 / 0.05]

= OMR 26,750 x 4.329476671

= OMR 115,813.50

Hence, the Present value of the Ordinary annuity will be (e)- OMR 115,813.50

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