Assume you make the following investments:

a.

You invest a lump sum of for years at % interest. What is the investment's value at the end of years?

b.

In a different account earning % interest, you invest at the end of each year for years. What is the investment's value at the end of years?

c.

What general rule of thumb explains the difference in the investments' future values?

LOADING... (Click the icon to view the future value table.)LOADING... (Click the icon to view the future value annuity table.)

LOADING... (Click the icon to view the present value table.)LOADING... (Click the icon to view the present value annuity table.)

a. You invest a lump sum of for years at % interest. What is the investment's value at the end of years? (Round your answer to the nearest whole dollar.)

Future value

=

b. In a different account earning % interest, you invest at the end of each year for years. What is the investment's value at the end of years? (Round your answer to the nearest whole dollar.)

Future value

=

c. What general rule of thumb explains the difference in the investments' future values?

The future value of the annuity is

higher

lower

than the future value of the lump sum investment. The

annuity

lump-sum investment

earned interest over the full years. However, the

annuity

lump-sum investment

earned interest only as the installments were received over the course of years. The

later

sooner

the cash is invested, the

less

more

interest is earned. The investor lets time do the work.

o Assume you make the following investments a. You invest a lump sum of 55 000 for four years at 12% interest What is the investment's value at the end of four years? b. In a different account earning 12% interest, you invest $1 250 at the end of each year for four years. What is the investment's value at the end of four years? c. What general rule of thumb explains the difference in the investments future values? (Click the icon to view the future value table.) Click the icon to view the future value annuity table.) Click the icon to view the present value table) Click the icon to view the present value annuity table) a. You invest a lump sum of $5,000 for four years at 12% interest What is the investments View at the end of four years? (Round your answer to the nearest whole dollar Future value b. In a different account earring 12% Interest you invest $1,250 at the end of each year for four years. What is the investments value at the end of four years? (Round your answer to the nearest whole dollar) Futute value c. What general role of thumb explains the difference the investments future ? The future value of the annuity is than the future value of the lump sum investment. The Barned intorest over the full four years However the earned intorest only as the instaliments were received over the course of four years. The the cash is invested me interest is comed Tho investor bets time do the work Enter any number in the edit fields and then continue to the next question 10 of 14 (12 complete) TI ments Future Value of $1 or lo inte ins the bnt's value at th Te val Sentv Future Value of $1 10% 12% Period 14% 16% ar four 1 1 100 1.120 1.140 1 160 und your answ 2 1 210 1254 1.300 1.346 3 1.331 1.405 1.482 1.561 4 1464 1 574 1.689 1 811 t's value at the en Intere dollar. 5 1.611 1 762 1925 2 100 ] 6 1.772 1974 2 195 2.436 7 1.949 2.211 2826 ains the 2.502 2 853 8 2.144 2.476 3.278 9 2.773 3 252 3.803 hed interest over the 2.358 2.594 earne 10 3.106 3.707 4.411 le the case #estor lets Print Done elds and then continue to the next queston, rents artol inter 1 Present Value of $1 - X ent's value at as the e val entv Periods 16% Present Value of $1 10% 12% 14% 0.909 0.893 0.877 0.826 0.797 0.769 four 1 0.862 pund your ans N 0.743 3 0.751 0.712 0.675 0.641 4 0.683 0.636 0.592 0.552 intere dollar. t's value at the e 5 0 621 0.567 0.519 0.476 0.410 6 0.507 0.456 0.564 0.513 7 0 452 0.400 0.354 ans the 8 0.467 0.404 0.305 0.351 0.308 9 0.424 0.361 0.263 hed interest over 7 earne 10 0.386 0.322 0.270 0.227 le the ca stor lets Print Done as and then continue to the next question 2 Quiz Time Rema 10 of 14 (12 complete) stments - X 0 Future Value of Annuity of $1 unt's value for fou % intell lains the cure vall esent v Future Value of Annuity of $1 10% 12% 14% Period 16% for four 1 1.000 1.000 1.000 1.000 bund your 2 2.100 2 120 2.140 2.160 ] 3 3.310 3.374 3.440 3.506 4 4.641 4.779 4.921 5.066 t's value att % interes e dollar 5 6.105 6.353 6.610 6.877 6 7.716 8.115 8 536 8.977 7 9.487 10.089 10.730 lains the 11.414 14.240 8 11.436 12.300 13 233 9 13.579 14.776 16.085 17.519 fed interest earne 10 15.937 17.549 19.337 21.321 vestor lets Print Done elds and then continue to the next question Present Value of Annuity of $1 Period 16% Present Value of Annuity of $1 10% 12% 14% 0.909 0.893 0.877 1.736 1.690 1.647 1 0.862 N 1 605 2.246 3 2.487 2.402 2.322 4 3.170 3.037 2.914 2.798 5 3.791 3.605 3.433 3.274 6 4.355 4.111 3.889 3 685 7 4.868 4.564 4.288 4 039 8 5.335 4.968 4.639 4.344 9 5.759 5.328 4.946 4.607 10 6.145 5.650 5.216 4.833 Print Done then conunue to the next