1.explain the two types of annuities and flow you would utilize excel in solving the present value of each type?
2. explain the advantages of absolute reference?
The two types of annuities are ordinary annuity and annuity due. The ordinaryannuity is paid out at the endof each period and the annuity due is paid at the beginning of each period.In excelthey are computed as below. We need to select the last parameter as 0 in case of ordinary annuity and as 1 in case of annuity due. The other data as toPresent value,annuity, term and rate would remain the same.
Absolute reference means that the value of the cell does not change in any circumstance. This is required when the value of the cell is required to remain constant. It remains the same even if it is copied or transfered to another place.
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