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Old 11-20-2017, 08:55 PM
Futon Futon is offline
Join Date: Jul 2016
Studying for FM
Posts: 128

Originally Posted by Gandalf View Post
Their solution is correct. Yours has the payment in the 3-year annuity at the end of year 2, not the beginning. The payment is at t=1, not t=2.
Ah right. "beginning of year two" blinded me. Why the +1 though? I would've multiplied by (1+i)^3 in addition to (1+i)^-1 since it is a perpetuity-due. Is there a reason why he didn't do that?
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