Valuation II Annuities (calculation) You are evaluating two annuity investments using a discount rate of 8% p.a. Annuity 1 - This annuity has 8 semi-annual payments in advance which grow at 0.8% every 6 months. The first payment is $800. The value of this annuity today is: Annuity 2 - This annuity pays $130 every month in advance for 4 year. The value of this annuity today is: You are asked to pay $5,000 to buy any one of the investments. Which investment will you buy (if any) and calculate the gain? Answer: (Each correctly filled blank is 1/3 of the 10 marks)