Question
Mrs. Jones receives an annuity of $450, payable once every two years. The annuity stretches out over 20 years. The first payment (of $450) occurs
Mrs. Jones receives an annuity of $450, payable once every two years. The annuity stretches out over 20 years. The first payment (of $450) occurs two years from today. The annual interest rate is 6%.
a) What is the interest rate over a two-year period (two-year interest rate)?
b) How many times (periods) will Mrs. Jones be paid $450?
c) What is the present value of the annuity?
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To calculate the answers we will use the formula for the present value of an annuity PV PMT 1 1 rn ...
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Modern Advanced Accounting in Canada
Authors: Hilton Murray, Herauf Darrell
8th edition
1259087557, 1057317623, 978-1259087554
