P5-19 Future value of an annuity For each case in the accompanying table, answer the questions that follow. roiensq aid bevisson and oft dolorib ban suley smit Case Annuity payment Interest rate Annuity length (years) 10 8% dass ssiblmani m $ 2,500 B 500 12 5 20. da mes neo ad hi 30,000 8 Sboisq 1697-01 od goib amat 11,500 E 6,000 30 14 (1) a. Calculate the future value of the annuity, assuming that it is yq 000,0 Cal (1) An ordinary annuity. 1561 2.1 mi (2) An annuity due. slon oda nielq soilggs ou 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.

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
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P5-19 Future value of an annuity For each case in the accompanying table, answer the
questions that follow.
ndo
Case
Annuity length (years)
ste noiensq aid bevisson do
(bax 2011 Binodw 000
yaq dass sicibanim id A
17 mozib bat suley smit
Annuity payment
Interest rate
10
$ 2,500
8%
B
500
12
с
otada mes nesal ti
30,000
20
D
Sboisq 1854-01 od goib ans
11,500-li
6,000
E
30
14 (1)
a. Calculate the future value of the annuity, assuming that it is
smysq 000,0
(1) An ordinary annuity.
(2) An annuity due.
moisel1 sdi nila
type
oldspilggs b. Compare your findings in parts a(1) and a(2). All else being identical, which
of annuity-ordinary or annuity due-is preferable? Explain why.
6
5
8
Transcribed Image Text:P5-19 Future value of an annuity For each case in the accompanying table, answer the questions that follow. ndo Case Annuity length (years) ste noiensq aid bevisson do (bax 2011 Binodw 000 yaq dass sicibanim id A 17 mozib bat suley smit Annuity payment Interest rate 10 $ 2,500 8% B 500 12 с otada mes nesal ti 30,000 20 D Sboisq 1854-01 od goib ans 11,500-li 6,000 E 30 14 (1) a. Calculate the future value of the annuity, assuming that it is smysq 000,0 (1) An ordinary annuity. (2) An annuity due. moisel1 sdi nila type oldspilggs b. Compare your findings in parts a(1) and a(2). All else being identical, which of annuity-ordinary or annuity due-is preferable? Explain why. 6 5 8
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