Find the future values of the following ordinary annuities: a. FV of $400 paid each 6 months
Question:
a. FV of $400 paid each 6 months for 5 years at a nominal rate of 12% compounded semiannually
b. FV of $200 paid each 3months for 5 years at a nominal rate of 12% compounded quarterly
c. These annuities receive the same amount of cash during the 5-year period and earn interest at the same nominal rate, yet the annuity in part b ends up larger than the one in part a. Why does this occur?
Annuity
An 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 
Fundamentals of Financial Management
ISBN: 978-1285867977
14th edition
Authors: Eugene F. Brigham, Joel F. Houston
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