Answer:
Discount factor will be 0.735
And annuity factor will be 3.312
Explanation:
We have given rate of interest r = 8 %
Time period n = 4 year
We have to calculate discount factor
Discount factor is equal to [tex]=\frac{1}{(1+r)^n}=\frac{1}{(1+0.08)^4}=\frac{1}{1.08^4}=0.735[/tex]
So discount factor will be equal to 0.735
Annuity factor is equal to [tex](1-\frac{\frac{1}{(1+r)^n}}{r})[/tex]
So annuity factor will be equal to [tex](1-\frac{\frac{1}{(1+r)^n}}{r})=(1-\frac{\frac{1}{(1+0.08)^4}}{0.08})=3.312[/tex]
So annuity factor will be 3.312
Annuity factor is determined for a progression of equivalent installment/receipt for indicated time frame.
In any case, discounting factor is determined distinctly for discover the present estimation of sum which will be put resources into year 4.
