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            | Topic: | 
            
                
                    Business
                
             | 
        
        
            | Number of pages / Number of words: | 
            
                4 / 971             | 
        
                
    
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If a 7 percent interest rate is applied, what is the current value of the future payments?
Here we have to find out the present value of annuity and by applying y the above formulae the value is $77417.27
Finding the capital recovery annuity
The compounding value technique is also used to find the capital recovery annuity
Example:
To help you get through college, your parents made a deposit of $25,000 into a bank account paying 8% interest...
        
        
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Starting next year, you plan to withdraw equal amounts for the account at the end of each of the next four years. What is the most you can withdraw annually?
Here we have to find capital recovery annuity
A=P*((r*(1+r)^n)/(1+r)^n-1)
P=present value, A= Annuity r= rate of interest n=duration A=$7548
OPPORTUNITY COST PRINCIPLE
The opportunity cost or alternative costs are the returns from the second best use of the organization's resources or here in this case the individual's capability...
        
        
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