You are comparing two annuities. Annuity A pays $110 at the end of each year for 5 years. Annuity B pays $100 at the beginning of each year for 5 years. The rate of return on both annuities is 12 percent. Which one of the following statements is correct given this information? A) Annuity B has both a higher present value and a higher future value than Annuity A. B) Annuity A has the same present value and future value as Annuity B. C) Annuity A has both a higher present value and a higher future value than Annuity B.
You are comparing two annuities. Annuity A pays $110 at the end of each year for 5 years. Annuity B pays $100 at the beginning of each year for 5 years. The rate of return on both annuities is 12 percent. Which one of the following statements is correct given this information? A) Annuity B has both a higher present value and a higher future value than Annuity A. B) Annuity A has the same present value and future value as Annuity B. C) Annuity A has both a higher present value and a higher future value than Annuity B.
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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Transcribed Image Text:You are comparing two annuities. Annuity A pays $110 at the end of each year for 5 years. Annuity B pays $100 at the beginning of each
year for 5 years. The rate of return on both annuities is 12 percent. Which one of the following statements is correct given this
information?
A) Annuity B has both a higher present value and a higher future value than Annuity A.
B) Annuity A has the same present value and future value as Annuity B.
C) Annuity A has both a higher present value and a higher future value than Annuity B.
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