Present value of an annuity Consider the following cases. Case Annuity payment Interest rate Annuity length (years)

Fantastic news! We've Found the answer you've been seeking!

Question:


Present value of an annuity
Consider the following cases.

Case	Annuity payment	Interest rate		Annuity length (years)
A	$ 12,000	7%		3
B	55,000	12		15
C	700	20		9
D	140,000	5		7
E	22,500	10		5

a. Calculate the present value of the annuity, assuming that it is
(1) An ordinary annuity.
(2) An annuity due.
b. Compare your findings in parta(1) anda(2). All else being identical, which type of annuity - ordinary or annuity due - is preferrable? Explain why.

Related Book For answer-question

answer-question

Income Tax Fundamentals 2013

Income Tax Fundamentals 2013

ISBN: 9781285586618

31st Edition

Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill

See More Books

Posted Date: May 04, 2024 12:24 AM

See More Questions

This assignment requires you to complete the 2022 tax reporting for a fictional woman named Anna Smith. Question 1 T1 - step 4 - line 66 This is Anna's taxable income Answer: Question 2 T1 - step...
5. (3 points) Evaluate fe(2x + y)ds, where C is the line segment from (0,2) to (3,-2), i.e., C : r(t) = (3t, 2 - 4t), 0 t 1. 6. (3 points) Let F = (2xy + 2x, 2xy +y). Given that f(x, y) = xy + x +...
Find the slope of the line tangent to the graph of the function at the given value of x. y = -8x + 5x; x = 2
Find the first derivatives. f(P) = P 3 + 3P 2 - 7P + 2
If two different pedestrian deaths are randomly selected, find the probability that in both cases the pedestrians were intoxicated.
Melissa Young had always been encouraged by her accounting professor to apply her accounting skills as much as possible. When her uncle asked her to prepare his accounting records for a company he...
Solve Prob. R14-9 using Castiglianos theorem. Data from Prob. R14-9 The cantilevered beam is subjected to a couple moment \(\mathbf{M}_{0}\) applied at its end. Determine the slope of the beam at...
1. Jesse wants to see a context diagram and a diagram 0 DFD for TIMS. 2. Need to review the JAD session summary again! Try to identify four main TIMS functions and draw a lower-level DFD for each...
There are various types of retirement income sources. Read the following definitions and match each term with its appropriate definition. Common retirement income sources are: Social Security,...
KSB wants to run a new programme. Estimated fees to be paid by a student is GH7,500. Fixed cost for the programme is expected to GH135,000 per annum while variable cost per student is estimate at...
Ben is a 25-year-old paralegal at a post-Superbowl party. In attendance at the party is his college friend, Tom. Both guys are enjoying themselves. There were a lot of people smoking marijuana,...
Article 288 TFEU distinguishes between two types of legislative instruments of the European Union (EU): Regulations and Directives. While Regulations are directly applicable and binding in their...
If a trial balance is showing a Cash account with a credit balance of $2,340, What does it means.
A risk free, zero coupon bond has 15 years to maturity. What is closest to the price per $1000 of face value that the bond will trade at if the YTM is 6%?
On Jan 1, you sold short 100 shares of Apple stock at $140 per share. On March 1, a dividend of $2 per share was paid. On April 1, you covered the short sale by buying the stock at a price of $120...
How does low-cost leadership differ from a differentiation strategy and a focus strategy? Is one better than another, in your opinion? Is one more ethical than another, in your viewpoint? Explain.
H.J. Heinzs annual dividends were as follows: 1990 ..............$0.540 1991.............. 0.620 1992 .............. 0.700 1993.............. 0.780 1994 .............. 0.860 1995 .............. 0.940...
Using data from a random sample of elementary schools, a researcher regresses average test scores on the fraction of students who qualify for reduced-price meals. The regression indicates a negative...
In the study of cigarette demand in this chapter, suppose we used as an instrument the number of trees per capita in the state. Is this instrument relevant? Is it exogenous? Is it a valid instrument?
In the demand curve model of Equation (12.3), is \(\ln \left(P_{i}^{\text {butter }} ight)\) positively or negatively correlated with the error, \(u_{i}\) ? If \(\beta_{1}\) is estimated by OLS,...