1. A 20-year annuity immediate pays 2000 for the first year. In each subsequent year,each payment is increased by $300 over the payment from the previous year. Thenominal annual interest rate is 18% convertible monthly. Calculate the present valueof this annuity.2. The present value of 10-year annuity immediate with level payments and effectiveannual interest rate i is X. The present value of 20-ycar annuity immediate withthe same payment and interest rate is 1.5.X. Find i

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1. A 20-year annuity immediate pays 2000 for the first year. In each subsequent year, cach payment is increased by $300 over the payment from the previous year. The nominal annual interest rate is 18% convertible monthly. Calculate the present valuc of this annuity.

1. A 20-year annuity immediate pays 2000 for the first year. In each subsequent year, cach payment is increased by $300 over the payment from the previous year. The nominal annual interest rate is 18% convertible monthly. Calculate the present valuc of this annuity.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. A 20-year annuity immediate pays 2000 for the first year. In each subsequent year,
each payment is increased by $300 over the payment from the previous year. The
nominal annual interest rate is 18% convertible monthly. Calculate the present value
of this annuity.
2. The present value of 10-year annuity immediate with level payments and effective
annual interest rate i is X. The present value of 20-ycar annuity immediate with
the same payment and interest rate is 1.5.X. Find i

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