# 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...

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