10. 53. Calculating annuities due [LO 6.1] Suppose you are going to receive $13 500 per year...
Question:
10. 53.
Calculating annuities due [LO 6.1] Suppose you are going to receive
$13 500 per year for five years. The appropriate interest rate is 6.8 per cent.
1. What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value if the payments are an annuity due?
2. Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? What if the payments are an annuity due?
3. Which has the highest present value, the ordinary annuity or the annuity due? Which has the highest future value? Will this always be true?
Step by Step Answer:
Fundamentals Of Corporate Finance
ISBN: 9781743768051
8th Edition
Authors: Stephen A. Ross, Rowan Trayler, Charles Koh, Gerhard Hambusch, Kristoffer Glover, Randolph W. Westerfield, Bradford D. Jordan