The figure shows a graph that compares the present values of two ordinary annuities of $1000 annually, one at 8% compounded annually and one at 10% compounded annually.
(a) Determine which graph corresponds to the 8% rate and which to the 10% rate.
(b) Use the graph to estimate the difference between the present values of these annuities for 25 years.
(c) Write a sentence that explains this difference.

Transcribed Image Text:

15,000 12,500 10,000 7500 5000 2500 time 5 10 15 20 25 30 35 Years Dollars