Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Related questions
Question
1.Which of the following statements is CORRECT?
Statement 1. The difference between the PV of an annuity due and the PV of an ordinary annuity is that each of the payments of the annuity due is discounted by one more year (period).
Statement 2. The difference between an ordinary annuity and an annuity due is that each of the payments of the annuity due earns interest for one additional year (period).
Statement 3. An annuity is a series of equal payments made at fixed equal-length intervals for a specified number of periods.
Statement 3 only.
All of the statements are correct.
None of the statement is correct.
Statement 1 only.
Statement 2 only.
Given some amount to be received several years in the future, if the interest rate increases, the present value of the future amount will
Be higher
Be variable.
Be lower.
Cannot tell.
Stay the same.
WITH EXPLANATION PLEASE
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution
Trending nowThis is a popular solution!
Step by stepSolved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- An even stream of payments over equal time periods where the interest rate is constant is referred to as a(n): a) Post-annuity. Ob) Annuity. c) Pre-annuity. d) Accumulated Annuity due.arrow_forwardAnnuity payments are assumed to come at the end of each payment period (termed an ordinary annuity). However, an exception occurs when the annuity payments come at the beginning of each period (termed an annuity due). What is the future value of a 14-year annuity of $2,100 per period where payments come at the beginning of each period? The interest rate is 13 percent. Use Appendix C for an approximate answer, but calculate your final answer using the formula and financial calculator methods. To find the future value of an annuity due when using the Appendix tables, add 1 to n and subtract 1 from the tabular value. For example, to find the future value of.arrow_forwardAnnuity payments are assumed to come at the end of each payment period (termed an ordinary annuity). However, an exception occurs when the annuity payments come at the beginning of each period (termed an annuity due). What is the future value of a 15-year annuity of $1,700 per period where payments come at the beginning of each period? The interest rate is 11 percent. Use Appendix C for an approximate answer, but calculate your final answer using the formula and financial calculator methods. To find the future value of an annuity due when using the Appendix tables, add 1 to n and subtract 1 from the tabular value. For example, to find the future value of a $100 payment at the beginning of each period for five periods at 10 percent, go to Appendix C for n= 6 and /= 10 percent. Look up the value of 7.716 and subtract 1 from it for an answer of 6.716 or $671.60 ($100 * 6.716) Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. Future valuearrow_forward
- question 5arrow_forwardSubject :- Accountingarrow_forwardAn annuity due is an annuity for which: Question 10 options: A) the payments are made to repay a loan B) the payments are made at the beginning of each payment period C) the payments continue forever D) the payments are made at the end of each payment period E) the payment period is not the same as the conversion periodarrow_forward
- The difference between an ordinary annuity and an annuity due is that each of the payments of the annuity due earns interest for one additional year (period). * True Falsearrow_forwardAnnuity payments are assumed to come at the end of each payment period (termed an ordinary annuity). However, an exception occurs when the annuity payments come at the beginning of each period (termed an annuity due). What is the future value of a 8-year annuity of $3,600 per period where payments come at the beginning of each period? The interest rate is 7 percent. (Round your final answer to 2 decimal places.) Future valuearrow_forwardA series of equal periodic payments in which the first payment is made one compounding period after the date of the contract is ________. Group of answer choices a deferred annuity a compound annuity an ordinary annuity an annuity duearrow_forward
- PLEASE, WRITE THE SOLUTION ON PAPER, EXPLAINING THE ENTIRE PROCESS, STEP BY STEParrow_forwardFor each of the following situations involving annuities, solve for the unknown. Assume that interest is compounded annually and that all annuity amounts are received at the end of each period. (i = interest rate, and n = number of years) (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided. Round your final answers to nearest whole dollar amount.) Present Value Annuity Amount i = n = 1. ? $2,400 8% 5 2. 533,082 140,000 ? 4 3. 583,150 180,000 9% ? 4. 530,000 75,502 ? 8 5. 235,000 ? 10% 4arrow_forwardFor each of the following situations involving annuities, solve for the unknown. Assume that interest is compounded annually and that all annuity amounts are received at the end of each period. (i=interest rate, and n=number of years)(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of 1$ and PVAD of $1) (Use appropriate factor (s) from the tables provided. Round your final answers to nearest whole dollar amount.) Present Value Annuity Amount i= n= ______________ $ 2,600 8% 5 507,866 135,000 _____ 4 661,241 170,000 9% ____ 540,000 78,557 _____ 8 230,000 _____________ 10% 4arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education