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(a) Present value of Annuity A (b) X if present value of Annuity A is equal to present value of Annuity B. rks] (c) Level payment of Annuity C if present value of Annuity C is TWICE the present value of Annuity A. (d) Sum of future value of these annuities at the end of 20 years. marks

(a) Present value of Annuity A (b) X if present value of Annuity A is equal to present value of Annuity B. rks] (c) Level payment of Annuity C if present value of Annuity C is TWICE the present value of Annuity A. (d) Sum of future value of these annuities at the end of 20 years. marks

Essentials Of Investments
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
Problem 1PS
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Annuity A has 20 years annual payments as follows:- i) ii) iii) Annuity i) ii) iii) The first payment is 1000 made at the end of the first year. The subsequent payments increase by 3% from the previous years. The effective interest rate is 5% per annum. B has 20 years annual payments as follows:- The first payment is X made at the end of the first year. The subsequent payments increase by X from the previous years. The effective interest rate is 6% per annum. Annuity C is an annuity immediate of 20-year annual level payments with effective interest rate of 7% per annum. Evaluate, (a) Present value of Annuity A (b) X if present value of Annuity A is equal to present value of Annuity B. stelua. [3 marks] (c) Level payment of Annuity C if present value of Annuity C is TWICE the present value of Annuity A. (d) Sum of future value of these annuities at the end of 20 years. 13 marks] Preval 13 marks
Transcribed Image Text:Annuity A has 20 years annual payments as follows:- i) ii) iii) Annuity i) ii) iii) The first payment is 1000 made at the end of the first year. The subsequent payments increase by 3% from the previous years. The effective interest rate is 5% per annum. B has 20 years annual payments as follows:- The first payment is X made at the end of the first year. The subsequent payments increase by X from the previous years. The effective interest rate is 6% per annum. Annuity C is an annuity immediate of 20-year annual level payments with effective interest rate of 7% per annum. Evaluate, (a) Present value of Annuity A (b) X if present value of Annuity A is equal to present value of Annuity B. stelua. [3 marks] (c) Level payment of Annuity C if present value of Annuity C is TWICE the present value of Annuity A. (d) Sum of future value of these annuities at the end of 20 years. 13 marks] Preval 13 marks
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