But if you use more than one rate to evaluate the present value of the pay-
ments, or if you have payments of differing sizes, then you cannot use the
equation we developed earlier in this chapter. That equation requires that all
the payments be the same size, that the present values all be evaluated at the
same interest rate, and that the time periods between payments all be the same.
These conditions frequently happen in finance, which makes the present value
of an annuity equation especially important.
ANALYSIS AND CALCULATION OF SOME
COMBINATION ANNUITIES CERTAIN
Sometimes you may have a problem that requires you to calculate the present
value of part of an annuity certain. You may be able to compute the required
value by analyzing the flow of funds ...