This problem demonstrates the dependence of an annuitys present value on the compounding frequency What minimum initial amount will sustain a 25 year annuity paying $1000 at the end of each year if the initial amount can be invested to earn a 6 compounded annually b 6 compounded semiannually c 6 co...

Given PMT 1000 Term 25 years i 6 a m 1 n 125 25 b m 1 2 ...

This problem demonstrates the dependence of an annuitys present value on the compounding frequency. What minimum initial

Question:

This problem demonstrates the dependence of an annuity’s present value on the frequency. What minimum initial amount will sustain a 25-year paying $1000 at the end of each year if the initial amount can be invested to earn:
a. 6% compounded annually?
b. 6% compounded semiannually?
c. 6% compounded quarterly?
d. 6% compounded monthly?
Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,... Compounding
Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will...