Hi all, I’m trying to understand why I’d have to discount PV of the annuity back by 4 years, instead of 5 years in the second step. Can someone please explain to me? Thanks!
The solution assumes an immediate annuity, so the PV will be as of time 4. You could also use an annuity due that would give the PV as of time 5. Either way should give the same end answer.
ETA: You can also do this calc in ONE step with the CF worksheet. 