Valuation II Annuities (calculation) - V2 You are evaluating two annuity investments using a discount rate of 10% p.a. Annuity 1 - This annuity has 8 quarterly payments in advance, growing at 1% every 3 months. The first payment is $500 - The cashflow stream in this annuity resembles a/an (1 mark) - The inputs to calculate this annuity value are: PMTorCF=n=i=g=(0.5mark)(0.5mark)(0.5mark) - The value of this annuity today is: (1 mark) Annuity 2 - This annuity pays $40 every week for 2 years. - The cashflow stream in this annuity resembles a/an (1 mark) - The inputs to calculate this annuity value are: - PMT or CF= (0.5 mark) n=00.5 mark) i=(0.5 mark ) g= (0.5 mark) - The value of this annuity today is: (1 mark) You are asked to pay $3,000 to buy any one of the investments. You are asked to pay $3,000 to buy any one of the investments. Which investment will you buy (if any)? Answer: (1 mark). Calculate the gain