Suppose you are going to receive $14,500 per year for five years. The appropriate interest rate is
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Suppose you are going to receive $14,500 per year for five years. The appropriate interest rate is 7.1 percent.
a. What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value if the payments are an annuity due?
b. Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? What if the payments are an annuity due?
c. Which has the highest present value, the ordinary annuity or the annuity due? Which has the highest future value? Will this always be true?
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a PV ordinary annuity PV FV 1 1rnr Pv 14500 1 100715 0071 14500 1 091...View the full answer
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Related Book For 
Fundamentals Of Corporate Finance
ISBN: 9781265553609
13th Edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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