Find the future values of the following ordinary annuities: a. FV of $400 each 6 months for
Question:
Find the future values of the following ordinary annuities:
a. FV of $400 each 6 months for 5 years at a nominal rate of 12 percent, compounded semiannually.
b. FV of $200 each 3 months for 5 years at a nominal rate of 12 percent, compounded quarterly.
c. The annuities described in parts a and b have the same amount of money paid into them during the 5-year period and both earn interest at the same nominal rate, yet the annuity in part b earns $101.60 more than the one in part a over the 5 years. Why does this occur?
AnnuityAn annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...
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Related Book For 
Financial management theory and practice
ISBN: 978-0324422696
12th Edition
Authors: Eugene F. Brigham and Michael C. Ehrhardt
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