Go to the Student Edition of the textbooks Web site. In Chapter 10, find Influence of Annuity
Question:
a. Enter PMT = $100 and I = 8% for both Annuity A and Annuity B. Set n = 20 for Annuity A and n = 40 for Annuity B. This means that B contains twice as many payments as A. In percentage terms,
(i) How much larger is the present value of B than the present value of A?
(ii) How much larger is the future value of B than the future value of A?
b. Enter PMT = $100 and n = 30 for both annuities. Set I = 8% for Annuity A and i = 9% for Annuity B. In relative terms, the interest rate for B is
9% - 8% / 8% × 100% = 12.5%
larger than the rate for A. In percentage terms,
(i) How much smaller is the present value of B than the present value of A?
(ii) How much larger is the future value of B than the future value of A?
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,... Future Value
Future value (FV) is the value of a current asset at a future date based on an assumed rate of growth. The future value (FV) is important to investors and financial planners as they use it to estimate how much an investment made today will be worth...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
a Given For Annuity A PMT 100 i 8 n 20 For Annuity B PMT 100 i 8 n 40 i PV B PV A 11924698181 1...View the full answer
Answered By
Asim farooq
I have done MS finance and expertise in the field of Accounting, finance, cost accounting, security analysis and portfolio management and management, MS office is at my fingertips, I want my client to take advantage of my practical knowledge. I have been mentoring my client on a freelancer website from last two years, Currently I am working in Telecom company as a financial analyst and before that working as an accountant with Pepsi for one year. I also join a nonprofit organization as a finance assistant to my job duties are making payment to client after tax calculation, I have started my professional career from teaching I was teaching to a master's level student for two years in the evening.
My Expert Service
Financial accounting, Financial management, Cost accounting, Human resource management, Business communication and report writing. Financial accounting : • Journal entries • Financial statements including balance sheet, Profit & Loss account, Cash flow statement • Adjustment entries • Ratio analysis • Accounting concepts • Single entry accounting • Double entry accounting • Bills of exchange • Bank reconciliation statements Cost accounting : • Budgeting • Job order costing • Process costing • Cost of goods sold Financial management : • Capital budgeting • Net Present Value (NPV) • Internal Rate of Return (IRR) • Payback period • Discounted cash flows • Financial analysis • Capital assets pricing model • Simple interest, Compound interest & annuities
65+ Reviews
86+ Question Solved
Related Book For 
Question Posted:
