Question

What is the pvad factor for 1 year and 24% interest rate

Answer 1

The present value annuity discount factor (PVAD) for a 1-year period at a 24% interest rate is approximately 0.806452. This factor is used to calculate the present value of equal cash flows received or paid at regular intervals.

The present value annuity discount factor (PVAD) is used to calculate the present value of a series of equal cash flows received or paid at regular intervals. The formula for PVAD is:

`\[ PVAD = (1 - (1 + r)^(-n))/(r) \]`

Where:

- r is the interest rate per period,

- n is the number of periods.

If you have a 24% interest rate and want to calculate the PVAD for 1 year n = 1, the calculation would be:

`\[ PVAD = (1 - (1 + 0.24)^(-1))/(0.24) \]`

Solving this expression will give you the PVAD factor for a 1-year period with a 24% interest rate.

Let's calculate the PVAD factor for 1 year and a 24% interest rate using the formula:

`\[ PVAD = (1 - (1 + 0.24)^(-1))/(0.24) \]\[ PVAD = (1 - (1.24)^(-1))/(0.24) \]\[ PVAD = (1 - 0.80645161)/(0.24) \]\[ PVAD = (0.19354839)/(0.24) \]\[ PVAD \approx 0.806452 \]`

Therefore, the present value annuity discount factor (PVAD) for 1 year and a 24% interest rate is approximately 0.806452.