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Q4. If the required yote of return increases, what is the impact on the following? (2 marks) 1. A present value of an annuity 2.
Q4. If the required yote of return increases, what is the impact on the following? (2 marks) 1. A present value of an annuity 2. A future value of an annuity Q5- Jose now has $500. How much would he have after 6 years if he leaves it invested at 5.5% with annual compounding? (2 marks) 06- Your aunt is about to retire, and she wants to sell some of her stock and buy an annuity that will provide her with income of $50,000 per year for 30 years, beginning a year from today. The going rate on such annuities is 7.25%. How much would it cost her to buy such an annuity today? (2 marks) 07- You buy an annuity which will pay you S12,000 a year for ten years. The payments are paid on the first day of each year. What is the value of this annuity today at a 7% discount ? (2 marks) Q8. You are scheduled to receive annual payments of $10,000 for each of the next 25 years. Your discount rate is 8.5%. What is the difference in the present value if you receive these paymepls at the beginning of each year rather than at the end of each year? (2 marks)
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