Question: 1future value ordinary annuity versus annuity due what is the...
Question details
1.Future Value: Ordinary Annuity versus Annuity Due
What is the future value of a 3%, 5year ordinary annuity that
pays $250 each year? Round your answer to the nearest cent.
$
If this were an annuity due, what would its future value be?
Round your answer to the nearest cent.
$
2. Present and Future Value of an Uneven Cash Flow Stream
An investment will pay $100 at the end of each of the next 3
years, $400 at the end of Year 4, $500 at the end of Year 5, and
$700 at the end of Year 6. If other investments of equal risk earn
11% annually, what is its present value? Round your answer to the
nearest cent.
$
What is its future value? Round your answer to the nearest
cent.
$
3. Annuity Payment and EAR
You want to buy a car, and a local bank will lend you $25,000.
The loan would be fully amortized over 6 years (72 months), and the
nominal interest rate would be 10%, with interest paid monthly.
What is the monthly loan payment? Round your answer to the nearest
cent.
$
What is the loan's EFF%? Round your answer to two decimal
places.
%
4. Uneven Cash Flow Stream
 Find the present values of the following cash flow streams. The appropriate interest rate is 12%. Round your answers to the nearest cent. (Hint: It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course. Note that, when working with the calculator's cash flow register, you must enter CF_{0} = 0. Note also that it is quite easy to work the problem with Excel, using procedures described in the Chapter 4 Tool Kit.)
Year 
Cash Stream A 
Cash Stream B 
1 
$100 
$300 
2 
400 
400 
3 
400 
400 
4 
400 
400 
5 
300 
100 

Stream A $
Stream B $  What is the value of each cash flow stream at a 0% interest
rate? Round your answers to the nearest cent.
Stream A $
Stream B $
5. Future Value of an Annuity for Various Compounding Periods
Find the future values of the following ordinary annuities:
 FV of $800 paid each 6 months for 6 years at a nominal rate of
8%, compounded semiannually. Round your answer to the nearest
cent.
$  FV of $400 paid each 3 months for 6 years at a nominal rate of
8%, compounded quarterly. Round your answer to the nearest
cent.
$  The annuities described in parts a and b have the same amount
of money paid into them during the 6year period and both earn
interest at the same nominal rate, yet the annuity in part b earns
more than the one in part a over the 6 years. Why does this
occur?
SelectThe nominal deposits into the annuity in part (b) are greater than the nominal deposits into the annuity in part (a). The annuity in part (a) is compounded less frequently; therefore, more interest is earned on interest. The annuity in part (a) is compounded more frequently; therefore, more interest is earned on interest. The annuity in part (b) is compounded less frequently; therefore, more interest is earned on interest. The annuity in part (b) is compounded more frequently; therefore, more interest is earned on interest.Item 3