hey hydrogen, the type of annuity doesnt (and shouldnt) matter really… it matters in the sense that you press a different button on our calculator, but the concept is the same… all you are really doing is valuing some future cash flows to a current period… so, the very first $4k needs to be discounted 5 periods… the next $4k needs to be discounted 6 periods… etc etc… and, to help with the confusion regarding “5 years from today”, just do it in steps… and ask yourself: what does “1 year from today” mean… “2 years from today”…“3 years from today”…etc etc…
Eh? Then that means what I did was the same as you! The first payment occurs at t=5 and so on? OMG. I think I just made a big fat fool out of myself as I read nutshell’s post wrongly. I thought he was asking why it should be discounted by 5 years. Actually what I did was, to find at t=4 the PV of the annuity. Basically, imagine that t=4 is “today”, aka t=0, and t=5 is t=1 and so on. PV of the 10 year annuity at t=4 is $25670.6308 (which was what nutshell got), then u divide that $$25670.6308 by 1.09^4 since it corresponds to t=4. Argh. So afterall, itt seems that I wasnt wrong Just that i misread it and everything just went haywire 
sorry about that
ehehhe no worries, probably just a bit of post-exam stress disorder… =)
hahahaha, this is the first time i have heard of that. i have heard only of ptsd=post traumatic stress disorder. nice one bluey.
Well I’d say the exam WAS traumatic…
nutshell Wrote: ------------------------------------------------------- > i got this on Shweser book 1 page 130 problem > no.13 > > An investor will recieve an annuity of $4,000 a > year for ten years. The first payment is to be > received five years from today . at 9% discount > rate , this annuity’s worth today is closest to: > > A. $16,684 > B. $18,186 > C. $25,671 > D. $4,0000 > Here’s an alternate way to solve it (hey, I’m a calculator geek): In the CF register, CF0=0; C01=0; F01=4; C02=4000; F02=10; then calculate NPV @9% (in other words, you get nothing at time 0 and for the first 4 years and then $4000 per year for 10 years). This has the advantage of making you explicitly determine the CF’s for each year (which also requires a timeline).