P5-19 Future value of an annuity For each case in the accompanying table, answer thePART 2 Financial Toolsquestions that follow.Case Amount of annuityInterest rateDeposit period (years)A$2,50050030,00011,5006,0008%1210B20E1430a. 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 typeof annuity-ordinary or annuity due-is preferable? Explain why.

Future value is the expected value of the current sum at a future date.

Future value of an annuity For cach case in the accompanying table, answer the questions that follow. Case Amount of annuity Interest rate Deposit period (ycars) $2,500 500 30,000 11,500 6,000 8% 12 20 10 14 30 . Calculate the future value of the annuity assuming that it is (1) An ordinary annuity. (2) An annuity due. . 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.

Future value of an annuity For cach case in the accompanying table, answer the questions that follow. Case Amount of annuity Interest rate Deposit period (ycars) $2,500 500 30,000 11,500 6,000 8% 12 20 10 14 30 . Calculate the future value of the annuity assuming that it is (1) An ordinary annuity. (2) An annuity due. . 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.

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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(b) Find the present value of an annuity-immediate such that payments start at 1, increase by annual amounts of 1 to a payment of , and the decrease by annual amounts of 1 to a final payment of 1.
Estimating the annual interest rate with an ordinary annuity. Fill in the missing annual interest rates in the following table for an ordinary annuity stream: Number of Payments or Years 10 19 25 80 Annual Interest Rate % (Round to two decimal places.) % (Round to two decimal places.) % (Round to two decimal places.) % (Round to two decimal places.) Future Value $0.00 $12,286.30 $0.00 $1,435,078.21 C Annuity Present Value $580.00 $444.01 $1,985.57 $450.00 $2,298.49 $0.00 $37,000.00 $0.00
From the table below, answer comprehensively the following subparts: a. Which plan do you prefer? Why? b. How does duration affect the future value of an annuity? c. How does compounding period affect the future value of an annuity?
Explain how the future value of an ordinary annuityinterest table is converted to the future value of an annuitydue interest table.
Use the table below to answer the following questions: Present Value of an Annuity of 1 Future Value of an Annuity of 1 Period 4% 5% 8% 10% 4% 5% 8% 10% 4 3.6299 3.5460 3.3121 3.1699 4.2465 4.3101 4.5061 4.6410 5 4.4518 4.3295 3.9927 3.7908 5.4163 5.5256 5.8666 6.1051 6 5.2421 5.0757 4.6229 4.3553 6.6330 6.8019 7.3359 7.7156 7 6.0021 5.7864 5.2064 4.8684 7.8983 8.1420 8.9228 9.4872 8 6.7327 6.4632 5.7466 5.3349 9.2142 9.5491 10.6366 11.4359 9 7.4353 7.1078 6.2469 5.7590 10.5828 11.0266 12.4876 13.5795 10 8.1109 7.7217 6.7101 6.1446 12.0061 12.5779 14.4866 15.9374 11 8.7605 8.3064 7.1390 6.4951 13.4864 14.2068 16.6455 18.5312 Bobby gets a yearly alimony payment from his ex-wife and wants to save enough to put a 15% down payment on a home in 4 years. Median homes go for $950,000 and are expected to appreciate at the inflation rate of 3%. How much should Bobby put away into an investment each year if he can get a 8% return a year?…
Future value of an annuity Using the values below, answer the questions that follow. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Amount of annuity $5,000 Interest rate 6% Deposit period (years) 7 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 as an investment? Explain why.
Present value of an ordinary annuity. Fill in the missing present values in the following table for an ordinary annuity:
For each of the following annuities, calculate the present value. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Present Value Annuity Payment $ $ $ $ 1,950 1,265 11,455 29,900 Years 7 9 16 24 Interest Rate 8% 7 9 11
LETS START I. Matching type. Directions: Read each item carefully. Match Column A with the correct answer on Column B, write only the letter of answer on the blank provided. 1. An annuity where the payment interval is not the same as the a) Annuity b) Simple Annuity c) General Annuity interest period. 2. Type of annuity in which the payments are made at beginning - of each payment interval. d) Ordinary Annuity (or Annuity Immediate) e) Annuity Due 3. An annuity where the payment interval is the same as the interest period. - 4. An annuity in which payments begin and end at definite times. 5. Sum of present values of all the payments to be made during f) Annuity Certain g) Contingent Annuity the entire term of the annuity. h) Term of an Annuity (t) 6. Time between the first payment interval and last payment i) Regular or Periodic interval. Payment (P) 7. An annuity in which the payments extend over an indefinite (or j) Amount (Future Value) of indeterminate) length of time. 8. Sum of…
Listen The future value of an annuity due is: one period after the final payment. one period before the final payment. at the same point in time as the final payment.
To calculate the withdrawal amount from an account in which you want to maintain a static balance, you use the __________________ formula. Group of answer choices Installment Payment Simple Interest Annuity Compound Interest
A 5.66% annual coupon, 19-year bond has a yield to maturity of 4.14%. Assuming the par value is $1,000 and the YTM is expected not to change over the next year, what is the expected Current Yield for this bond? Please share your answer as a %.

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