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Question: 1future value ordinary annuity versus annuity due what is the...

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1.Future Value: Ordinary Annuity versus Annuity Due

What is the future value of a 3%, 5-year 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

  1. 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 CF0 = 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


  1. Stream A $   
    Stream B $   
  2. 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:

  1. 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.
    $   
  2. 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.
    $   
  3. The annuities described in parts a and b have the same amount of money paid into them during the 6-year 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?
    -Select-The 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
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