5) Consider an annual annuity composed by 10 payments equal to 125 € in the first 3 years and 150 € in the following period. Compute the value of the annuity after 5 years at the annual instantaneous rate 3%. a) 1297.89 € b) 1305.07 € c) 1302.8 € d) 1401.07 €
5) Consider an annual annuity composed by 10 payments equal to 125 € in the first 3 years and 150 € in the following period. Compute the value of the annuity after 5 years at the annual instantaneous rate 3%. a) 1297.89 € b) 1305.07 € c) 1302.8 € d) 1401.07 €
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Answer the following question. please don't use excel to solve this problem. just paper and use formula to solve it. thank you
Transcribed Image Text:5) Consider an annual annuity composed by 10 payments equal to 125 € in the
first 3 years and 150 € in the following period. Compute the value of the
annuity after 5 years at the annual instantaneous rate 3%.
a) 1297.89 €
b) 1305.07 €
c) 1302.8 €
d) 1401.07 €
Expert Solution
Step 1
Annuity refers to series of equalized payments that are paid or received at start or ending of specific period over constant time period. It is either used as recovery or accumulation of lump-sum amount (Sinking-Fund) considering compounding factor.
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