1)Find the present value of the following ordinary annuities . ( Notes: If you are using a...
Question:
1)Find thepresent valueof the followingordinary annuities. (Notes:If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can "override" the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer. This procedure can be used in many situations, to see how changes in input variables affect the output variable. Also, note that you can leave values in the TVM register, switch to Begin Mode, press PV, and find the PV of the annuity due.) Do not round intermediate calculations. Round your answers to the nearest cent.
- $600 per year for 10 years at 6%.
- $300 per year for 5 years at 3%.
- $600 per year for 5 years at 0%.
- Now rework parts a, b, and c assuming that payments are made at thebeginningof each year; that is, they areannuities due.
- Present value of $600 per year for 10 years at 6%: $
- Present value of $300 per year for 5 years at 3%: $
- Present value of $600 per year for 5 years at 0%: $
2)Future Value of an Annuity for Various Compounding Periods
Find the future values of the following ordinary annuities.
- FV of $200 each 6 months for 5 years at a nominal rate of 8%, compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent.
- FV of $100 each 3 months for 5 years at a nominal rate of 8%, compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent.
- 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 more than the one in part a over the 5 years. Why does this occur?