Mariam Kmal wishes to select the better of two 10 year annuities, C and D Annuity C is an ordinary annuity of US$2,500 per year for 10 years Annuity D is an annuity due of US$2,200 per year for 10 years a Find the future value of both annuities at the end of year 10, assuming that Mariam can earn (...

Time valueannuities a Annuity C Ordinary Annuity D Due 1 N 10 I 10 PMT 2500 N 10 I 10 PMT 2200 Solve ...

Mariam Kmal wishes to select the better of two 10-year annuities, C and D. Annuity C is

Question:

Mariam Kmal wishes to select the better of two 10-year annuities, C and D. C is an ordinary of US$2,500 per year for 10 years. D is an due of US$2,200 per year for 10 years.
a. Find the of both annuities at the end of year 10, assuming that Mariam can earn (1) 10 percent annual interest and (2) 20 percent annual interest.
b. Use your findings in part a to indicate which has the greater at the end of year 10 for both the (1) 10 percent and (2) 20 percent interest rates.
c. Find the present value of both annuities, assuming that Mariam can earn (1) 10 percent annual interest and (2) 20 percent annual interest.
d. Use your findings in part c to indicate which has the greater present value for both (1) 10 percent and (2) 20 percent interest rates.
e. Briefly compare, contrast, and explain any differences between your findings using the 10 percent and 20 percent interest rates in parts b and d.
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,... Future Value
Future value (FV) is the value of a current asset at a future date based on an assumed rate of growth. The future value (FV) is important to investors and financial planners as they use it to estimate how much an investment made today will be worth...