WK$3$ Submission: Time Value Exercise

Read Chapter $5$ in the textbook by Gitman & Zutter.

Work through the problem: P$5-19$ on pp$.193-196.$

Support your arguments using the quantitative analysis, but also include qualitative arguments for your position.

P$519$ Future value of an annuity For each case in the accompanying table, answer the questions that follow.

Case Amount of annuity Interest rate Deposit period $($years$)$

A $ $2,5008\%10$

B $500126$

C $30,000205$

D $11,50098$

E $6,0001430$

a$.$ Calculate the future value of the annuity, assuming that it is

$(1)$ An ordinary annuity.

$(2)$ An annuity due.

b$.$ Compare your findings in parts a$(1)$ and a$(2).$ All else being identical, which type of annuity$$ordinary or annuity due$$is preferable? Explain why.