Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Future and present value of an annuity Find the future and present value of a 20-year ordinary annuity paying $100.00 per year at each of

image text in transcribed
image text in transcribed
Future and present value of an annuity Find the future and present value of a 20-year ordinary annuity paying $100.00 per year at each of the following interest rates: a. 20% b. 10% c. 1% d. 0.1% e. What is the general principle that you see when you compare your answers here? What value are both the present value and future value getting close to as you move from part a to part d? a. The future value of a 20-year ordinary annuity paying $100.00 per year at an annual interest rate of 20% is \$ (Round to the nearest cent) The present value of a 20-year ordinary annuity paying $100.00 per year at an annual interest rate of 20% is \& (Round to the nearest cent) b. The future value of a 20 -year ordinary annuity paying $100.00 per year at an annual interest rate of 10% is 9 (Round to the nearest cent.) The present value of a 20-year ordinary annuity paying $100.00 per year at an annual interest rate of 10% is \$ (Round to the nearest cent.) c. The future value of a 20-year ordinary annuity paying $100.00 per year at an annual interest rate of 1% is \& (Round to the nearest cent.) The present value of a 20 -year ordinary annuity paying $100.00 per year at an annual interest rate of 1% is $ (Round to the nearest cent.) d. The future value of a 20-year ordinary annuity paying $100.00 per year at an annual interest rate of 0.1% is $ (Round to the nearest cent.) The present value of a 20-year ordinary annuity paying $100.00 per year at an annual interest rate of 0.1% is s (Round to the nearest cent.) e. Which of the following statements is true? (Select the best choice below.) A. When the interest rate approaches 0%, the future value of an ordinary annuity increases while the present value decreases. B. When the interest rate approaches 0%, both the future value and present value of an ordinary annuity increases. C. When the interest rate approaches 0%, both the future value and present value of an ordinary annuity decreases. D. When the interest rate approaches 0%, both the future value and present value of an ordinary annuity approach the amount that equals the annuity payment times the number of payments in the annuity

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Jeff Madura

5th edition

132994348, 978-0132994347

More Books

Students also viewed these Finance questions