document.write( "Question 1185513: The present value of an annuity of R pesos payable annually for 8 years, with the first payment at the end of 10 years, is 187, 481.25. Draw the cash flow diagram and find the value of R if money is worth 5%. \n" ); document.write( "

Algebra.Com's Answer #849699 by ikleyn(52908) $\"\"$ $\"About$

You can put this solution on YOUR website!
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\n" ); document.write( "\n" ); document.write( "        I agree with @CPhill on how he sets up the equation,
\n" ); document.write( "        but his calculations in his post to find R are not accurate.\r
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\n" ); document.write( "\n" ); document.write( "        I came to provide correct calculations.\r
\n" ); document.write( "\n" ); document.write( "        So, I placed here only part 3 of the @CPhill solution \r
\n" ); document.write( "\n" ); document.write( "        with my corrected/updated calculations.\r
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document.write( "**3. Solving for R:**\r\n" );
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document.write( "Now we have the equation:\r\n" );
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document.write( "187,481.25 = {R * [1 - (1.05)^-8] / 0.05} / (1.05)^9\r\n" );
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document.write( "We need to solve for R.  Here's the step-by-step process:\r\n" );
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document.write( "1. Simplify the annuity part: [1 - (1.05)^-8] / 0.05 = 6.463212759  (compare with the value of 6.7665 by @CPhill)\r\n" );
document.write( "2. Simplify the discounting part: (1.05)^9 = 1.551328216\r\n" );
document.write( "3. R = (187481.25 * 1.551328216) / 6.463212759 = 45,000 pesos\r\n" );
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document.write( "Therefore, the value of R is approximately 45,000 pesos.\r\n" );
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\n" ); document.write( "\n" ); document.write( "Solved/recalculated correctly.\r
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\n" ); document.write( "\n" ); document.write( "Compare my 45000 pesos with the @CPhill's 43000 pesos.
\n" ); document.write( "I think, in Finance, such an error/(a discrepancy) is not allowed.\r
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\n" ); document.write( "\n" ); document.write( "Artificial intelligence, which can not produce correctly simple arithmetical calculations ?\r
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\n" ); document.write( "\n" ); document.write( " It is just something unprecedented.\r
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