Question

An ordinary annuity has a present value of $1,000,000. The annuity has monthly payments.

The interest rate on the annuity is 10% APR. Which of the following represents the present value

if this were an annuity due?

a. $1,000,000 x 1.01

b. $1,000,000 / 1.10

c. $1,000,000 / 1.008333333

d. $1,000,000 x 1.008333333

e. $1,000,000 x 1.10

If you double the initial investment, then the future value will be more than doubled for a multi-period investment, everything else equat (Hint: FV = PV x (1 +0)5)

a. True

b. False

Answer #1

**Answer : 1) Correct Option is (d.) $1,000,000 x
1.008333333**

Reason :

Annuity Due means that the payments are made at the beginning of Period .

If Present Value of Ordinary Annuity is 1,000,0000

Present Value of Annuity Due = Present Value of Annuity * (1 + rate per period)

= 1,000,000 * [1 + (0.10/12)]

= 1000000 * 1.00833333

Answer : False .

Resaon :

Let us Assume Initial Investment is 100,000

Interest rate is 5%

Number of period s= 5 years

Future Value = 100,000 * (1 + 0.05)^5

= 127,628.16

Let us Double the initial Investment other things remaining Constant

If we double the investment the future

Future Value = 200,000 * (1 + 0.05)^5

= 255,256.31

What is the future value of a 12-year ordinary annuity of $350
if the interest rate is 6.5%? What is the present value of the
annuity? Hint: Solve for PV. What is the future value and present
value if the annuity were an annuity due?

Present value of an ordinary annuity and annuity due.
Jill Morris is presently leasing a small business computer from
Eller Office Equipment Company. The lease requires 10 annual
payments of $6,000 at the end of each year and provides the lessor
(Eller) with an 8% return on its investment. You may use the
following 8% interest factors:
9 Periods
10 Periods
11 Periods
Future Value of 1
1.99900
2.15892
2.33164
Present Value of 1
.50025
.46319
.42888
Future Value of...

Present value of an ordinary annuity and annuity due. (Show your
work)
Jill Morris is presently leasing a small business computer from
Eller Office Equipment Company. The lease requires 10 annual
payments of $6,000 at the end of each year and provides the lessor
(Eller) with an 8% return on its investment. You may use the
following 8% interest factors:
9 Periods 10
Periods 11 Periods
Future Value of
1
1.99900
2.15892
2.33164
Present Value of
1
.50025
.46319 ...

Present value of an ordinary annuity. Fill in the missing
present values in the following table for an ordinary annuity:
LOADING... . Number of Payments or Years Annual Interest Rate
Future Value Annuity Present Value 9 7% 0 $235.49
$nothing (Round to the nearest cent.)

Find the present value of a fifteen-year ordinary annuity that
pays $1340 monthly if the interest rate is 10% compounded monthly
for the first 7 years, and 6% compounded monthly thereafter.

Annuity A has a present value of $100,000 and makes 20 payments.
Annuity B has a present value of $100,000 and makes 18 payments.
All else equal, which one has the higher payment?

An ordinary annuity has an interest rate of 10% and a future
value of 80.00. What would be the future value of this same
annuity, if it were an annuity due instead of a regular annuity?
The future value of this annuity due is $

a. Find the future value of the ordinary annuity. (Round your
answer to the nearest cent.) $120 monthly payment, 5.5% interest, 1
year
b. Find the future value (FV) of the annuity due. (Round your
answer to the nearest cent.) $170 monthly payment, 6% interest, 14
years

1. Find the present value of the annuity given the following. a)
36 monthly payments of $250 in an account where the interest rate
is 3.5% compounded monthly.
PMT = 250, i = 0.035/12= 0.002916, n = 36 X 12 = 36
?? = ( 250[1-(1+0.002916)-342])/0.002916
PV = ( 24.879080)/0.002916
PV = 8531.920438 = $8,531.90
b) 60 weekly payments of $125 in an account where the interest
rate is 5% compounded weekly.
PMT = 125, i = 0.05/52= 0.000961, n...

If the present value of an ordinary, 2-year annuity is $6,600
and interest rates are 10 percent, what's the present value of the
same annuity due?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 15 minutes ago

asked 16 minutes ago

asked 21 minutes ago

asked 22 minutes ago

asked 25 minutes ago

asked 29 minutes ago

asked 29 minutes ago

asked 29 minutes ago

asked 32 minutes ago

asked 32 minutes ago

asked 32 minutes ago

asked 40 minutes ago