Find the present values of the following ordinary annuities: a. PV of $400 each six months for

Question:

Find the present values of the following ordinary annuities:

a. PV of $400 each six months for five years at a simple rate of 12 percent, compounded semiannually

b. PV of $200 each three months for five years at a simple rate of 12 percent, compounded quarterly

c. The annuities described in parts (a) and (b) have the same amount of money paid into them during the five-year period and both earn interest at the same simple rate, yet the present value of the annuity in part (b) is $31.46 greater than the one in part (a). Why does this occur?

Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...