PV-Ordinary Annuity.9-16 Find the present values of the following ordinary annuities:a.Various CompoundingPeriodsPV of $400 each six months for five years at a simple rate of 12 percent,compounded semiannuallyb. PV of $200 each three months for five years at a simple rate of 12 percent,compounded quarterlyC.The annuities described in parts (a) and (b) have the same amount ofmoney paid into them during the five-year period and both earninterest at the same simple rate, yet the present value of the annuityin part (b) is $31.46 greater than the one in part (a). Why doesthis occur?

Present value of ordinary annuity with compounding is calculated as below: Answer: Present value of…

Answered: PV-Ordinary Annuity. 9-16 Find the…

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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Present Value of an Annuity Determine the present value of $110,000 to be received at the end of each of four years, using an interest rate of 5%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar.
UNIT 7-18
Determine the nominal annual rate of interest of the following ordinary general annuity. Periodic Term Conversion Period Payment $81 semi-annually Present Value $1700 Payment Interval 3 months SCCCS The nominal annual rate of interest is (Round to two decimal places as needed.) 7 years % compounded semi-annually.
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For the following ordinary annuity, determine the size of the periodic payment. Present Future Value Value Payment Period $4,400.00 1 quarter Term of Annuity Interest Rate 16 years, 3 months Conversion Period 8.3% quarterly The periodic payment is $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
Find the future values of the following ordinary annuities: a. FV of $600 paid each 6 months for 5 years at a nominal rate of 6% compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent. $ b. FV of $300 paid each 3 months for 5 years at a nominal rate of 6% compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent. $ c. These annuities receive the same amount of cash during the 5-year period and earn interest at the same nominal rate, yet the annuity in part b ends up larger than the one in part a. Why does this occur? 819000.0 The annuity in part (b) is compounded more frequently, therefore, more interest is earned on previously-earned interest. V
Future Value of an Annuity for Various Compounding Periods Find the future values of the following ordinary annuities. FV of $600 each 6 months for 4 years at a nominal rate of 12%, compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent. $ FV of $300 each 3 months for 4 years at a nominal rate of 12%, compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent. $ The annuities described in parts a and b have the same amount of money paid into them during the 4-year period, and both earn interest at the same nominal rate, yet the annuity in part b earns more than the one in part a over the 4 years. Why does this occur?
K (Compound annuity) What is the accumulated sum of each of the following streams of payments? a. $500 a year for 8 years compounded annually at 10 percent. b. $104 a year for 7 years compounded annually at 9 percent. c. $32 a year for 12 years compounded annually at 11percent. d. $21 a year for 6 years compounded annually at 6 percent.
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Present Value of an Annuity Determine the present value of $310,000 to be received at the end of each of four years, using an interest rate of 6%, compounded annually, as follows: a. By successive computations, using the present value of $1 table in Exhibit 5. Round to the nearest whole dollar. First year $fill in the blank 1 Second Year fill in the blank 2 Third Year fill in the blank 3 Fourth Year fill in the blank 4 Total present value $fill in the blank 5 b. By using the present value of an annuity of $1 table in Exhibit 7. Round to the nearest whole dollar.$fill in the blank 6 c. Why is the present value of the four $310,000 cash receipts less than the $1,240,000 to be received in the future?The present value is less due to..........................over the 4 years.
From Ordinary Annuities; Calculate parts A, B & C assuming they are Annuities Due. A.$600 per year for 12 years at 8% B.$300 per year for 6 years at 4% C.$500 per year for 6 years at 0%
Find the future values of the following ordinary annuities: FV of $300 paid each 6 months for 5 years at a nominal rate of 12% compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent. $ FV of $150 paid each 3 months for 5 years at a nominal rate of 12% compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent. $ These annuities receive the same amount of cash during the 5-year period and earn interest at the same nominal rate, yet the annuity in part b ends up larger than the one in part a. Why does this occur?

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