Question: What effect does increasing the required return have on the present value of a future amount? Why? How are present value and future value calculations

  1. What effect does increasing the required return have on the present value of a future amount? Why?
  2. How are present value and future value calculations related?
  3. What is the difference between an ordinary annuity and an annuity due? Which is more valuable? Why?
  4. What are the most efficient way to calculate the present value of an ordinary annuity?
  5. How can the formula for the future value of an annuity be modified to find the future value of an annuity due?
  6. How can the formula for the present value of an ordinary annuity be modified to find the present value of an annuity due?
  7. What is a perpetuity? Why is the present value of a perpetuity equal to the annual cash payment divided by the interest rate?

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