You have the choice of two equally risk annuities, each paying $5,000 per year for 8 years. One is an annuity due and the other is an ordinary annuity. If you are going to be receiving the Kannully payments, which annuity would you choose to maximize your wealth? OA the annuity due OB. either one because they have the same present value Gar OC. the ordinary annuity OD. Since we don't know the interest rate, we can't find the value of the annutes and hence we cannot belt which one is better
You have the choice of two equally risk annuities, each paying $5,000 per year for 8 years. One is an annuity due and the other is an ordinary annuity. If you are going to be receiving the Kannully payments, which annuity would you choose to maximize your wealth? OA the annuity due OB. either one because they have the same present value Gar OC. the ordinary annuity OD. Since we don't know the interest rate, we can't find the value of the annutes and hence we cannot belt which one is better
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 18
You have the choice of two equally risk annuities, each paying $5,000 per year for 8 years. One is an annuity due and the other is an ordinary annuity. If you are going to be receiving the
Kannuity payments, which annuity would you choose to maximize your wealth?
OA the annuity due
OB. either one because they have the same present value
OC. the ordinary annuity
OD. Since we don't know the interest rate, we can't find the value of the annutes and hence we cannot tell which one is better
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