hire purchase system
This query is : Resolved
24 July 2009
what is annuity factor?
multiplying with just annual instalment one can get the full cash price...what is logic?
multiplying with just annual instalment one can get the full cash price...what is logic?
P B Srivathsan
(Expert)
04 August 2009
Assumption: Knowledge of discounting
Instalments are including the interest component. By discounting the annual instalments, we can get the current cash price or the NPV of all the instalments payable. It is the normal discounting, where annuity is the sum of discount factor for all the years of the loan.
Instalments are including the interest component. By discounting the annual instalments, we can get the current cash price or the NPV of all the instalments payable. It is the normal discounting, where annuity is the sum of discount factor for all the years of the loan.
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