The time line below contains an annuity with cash flow at the end of each period. $1,000
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Question:
- The time line below contains an annuity with cash flow at the end of each period.
| $1,000 | $1,000 | $1,000 | $1,000 | |||||||||||
| 0 | 1 | 2 | 3 | 4 | 5 | |||||||||
The periodic market interest rate is 12%.
- From the perspective of a potential investor at time 0 (zero), what type of annuity is described in the time line?
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- What is the total present value of the annuity at the end of period 1 (one)?
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- What is the total present value of the annuity at time 0 (zero)?
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Expert Answer:
Annuity Analysis The annuity described is not a typical ordinary annuity or annuity due In both of t... View the full answer
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