5. Present value of annulties and annuity payments The present value of an annuity is the sum of the discounted value of all future cash flows. You have the opportunity to invest in several annuities. Which of the following 10-year annuities has the greatest present value (PV)? Assume that all annuities earn the same positive Interest rate. An annulty that pays $1,000 at the end of each year An annulty that pays $1,000 at the beginning of each year An annuity that pays $500 at the beginning of every six months O An annuity that pays $500 at the end of every six months An ordinary annuity selling at $2,514.15 today promises to make equal payments at the end of each year for the next eight years (N). If the annuity appropriate interest rate (1) remains at 8.00% during this time, the annual annuity payment (PMT) will be You just won the lottery. Congratulations! The jackpot is $10,000,000, paid in eight equal annual payments. The first payment on the lottery Jackpot will be made today. In present value terms, you really won -assuming annual interest rate of 8.00% An annuity that pays $1,000 at the end of each year An annuity that pays $1,000 at the beginning of each year An annuity that pays $500 at the beginning of every six months An annuity that pays $500 at the end of every six months $634.38 $896.04 $437.50 $546.88 An ordinary annuity selling at $2,514.15 today promises to make equal payments at the end of each year Hd Jeight years (N). Ir the annuity's appropriate interest rate (1) remains at 8.00% during this time, the annual annuity payment (PMT) will be You just won the lottery. Congratulations! The jackpot is $10,000,000, paid in eight equal annual payments. The first payment on the lottery Jackpot will be made today. In present value terms, you really won -assuming annual interest rate of 8.00%. You have the opportunity to invest in several annuities. Which of the following 10-year annuities has the greatest present value (PV)? Assume that all annuities earn the same positive interest rate. An annulty that pays $1,000 at the end of each year An annuity that pays $1,000 at the beginning of each year An annuity that pays $500 at the beginning of every six months An annuity that pays $500 at the end of every six $7,757,962.57 $14,359,447.299 An ordinary annuity selling at $2,514.15 today promises to ts at the end of each year for the next eight years (N). If the annuity's appropriate interest rate (1) remains at 8.00% during this t $13,295,784.536 pity payment (PMT) will be $7,183,298.68 You just won the lottery. Congratulations! The jackpot is $1 will be made today. In present value terms, you really won light equal annual payments. The first payment on the lottery jackpot - assuming annual interest rate of 8.00%