Marian Kirk wishes to select the better of two 10-year annuities. Annuity 1 is an ordinary annuity

Question:

Marian Kirk wishes to select the better of two 10-year annuities. Annuity 1 is an ordinary annuity of $2,500 per year for 10 years. Annuity 2 is an annuity due of $2,300 per year for 10 years.
a. Find the future value of both annuities 10 years from now, assuming that Marian can earn (1) 6% annual interest and (2) 10% annual interest.
b. Use your findings in part a to indicate which annuity has the greater future value after 10 years for both the (1) 6% and (2) 10% interest rates.
c. Find the present value of both annuities, assuming that Marian can earn (1) 6% annual interest and (2) 10% annual interest.

d. Use your findings in part c to indicate which annuity has the greater present value for both (1) 6% and (2) 10% interest rates.

e. Briefly compare, contrast, and explain any differences between your findings using the 6% and 10% 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...

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