State the justification(s) for using a linear gradient series with a constant amount (G) to calculate the future equivalent at the end of 2027, at 10% per year of the following series of cash flows. Why a "brute force" approach is often unacceptable? (b) Two students are arguing about the concept of "annuity". Student A insists that the "Ordinary Annuity" and "Annuity Due" are the same concept. Student B thinks that these two are totally different. You, as a teacher, are asked to explain to both students that their understandings can be both correct. (limit your answer to less than 200 words)
State the justification(s) for using a linear gradient series with a constant amount (G) to calculate the future equivalent at the end of 2027, at 10% per year of the following series of cash flows. Why a "brute force" approach is often unacceptable? (b) Two students are arguing about the concept of "annuity". Student A insists that the "Ordinary Annuity" and "Annuity Due" are the same concept. Student B thinks that these two are totally different. You, as a teacher, are asked to explain to both students that their understandings can be both correct. (limit your answer to less than 200 words)
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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Question
(a) State the justification(s) for using a linear gradient series with a constant amount (G) to calculate the future equivalent at the end of 2027, at 10% per year of the following series of cash flows. Why a "brute force" approach is often unacceptable? (b) Two students are arguing about the concept of "annuity ". Student A insists that the "Ordinary Annuity" and "Annuity Due" are the same concept. Student B thinks that these two are totally different. You, as a teacher, are asked to explain to both students that their understandings can be both correct. (limit your answer to less than 200 words)
Transcribed Image Text:Years
2023
2024
2025
2026
2027
$200
$400
S600
S800
S1,000
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