Annuities where the payments occur at the beginning of each time period are.called refer to annuity streams with payments occurring at the endof exch fine period
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A: Annuity are of two types Annuity due and Normal Annuity
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- [Question 6 An ordinary annuity is best defined as __________________. Select one: A. equal payments paid at the end of regular intervals over a stated time period B. increasing payments paid for a definitive period of time C. increasing payments paid forever D. equal payments paid at the beginning of regular intervals for a limited time periodAn 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 periodNot use excel Q)Complete the ordinary annuity as an annuity due (future value) for the following. Do not round intermediate calculations. Round your answer to the nearest cent. Amount of payment $4,900 Payment payable: annually Years: 14 Interest rate: 4% Annuity due: ?
- 9. Perpetuities Perpetuities are also called annuities with an extended, or unlimited, life. 1. Based on your understanding of perpetuities, answer the following questions: Which of the following are characteristics of a perpetuity? Check all that apply. A perpetuity continues for a fixed time period. In a perpetuity, returns—in the form of a series of identical cash flows—are earned. The principal amount of a perpetuity is repaid as a lump-sum amount. A perpetuity is a series of regularly timed, equal cash flows that is assumed to continue indefinitely into the future. 2. A local bank’s advertising reads: “Give us $35,000 today, and we’ll pay you $2,400 every year forever.” If you plan to live forever, what annual interest rate will you earn on your deposit? 5.49% 6.86% 9.60% 8.23% 3. Oops! When you went in to make your deposit, the bank representative said the amount of required deposit reported in the advertisement was incorrect and…Problem 8: Present Value of an Annuity Refer to each case in the table below to answer what are required in this problem. Find the present value of the annuity, assuming that it is (1) An ordinary annuity. (2) An annuity due. Compare your findings in parts a(1) and a(2). All else being identical, which type of annuity—ordinary or annuity due—is preferable? Explain why15. Which of these answers best describes an ordinary annuity? Select one: a. A series of equally sized regularly occurring cash flows extending indefinitely into the future, with the cash flows occurring at the end of each period b. A series of equally sized regularly occurring cash flows extending indefinitely into the future, with the cash flows occurring at the start of each period c. A series of equally sized regularly occurring cash flows extending n periods into the future, with the cash flows occurring at the end of each period d. A series of equally sized regularly occurring cash flows extending n periods into the future, with the cash flows occurring at the start of each period
- Question content area top Part 1 (Related to Checkpoint 6.4) (Present value of a perpetuity) What is the present value of a $ 220 perpetuity discounted back to the present at 8 percent? Question content area bottom Part 1 The present value of the perpetuity is $ enter your response here . (Round to the nearest cent.)Frequency of interest payment = annually; year to maturity=7 Select one a) 13% b) 7% c) 12% d) 9%march eacg Letter to the correct number answer to the left: 1. Interest 2. Monetary asset 3. Compound interest 4. Simple interest 5. Annuity 6. Present value of a single amount 7. Annuity due 8. Future value of a single amount 9. Ordinary annuity 10. Effective rate or yield 11. Nonmonetary asset 12. Time value of money 13. Monetary liability 1. ______ 2. ______ 3. ______ 4. ______ 5. ______ 6. ______ 7. ______ 8. ______ 9. ______ 10. ______ 11. ______ 12. ______ 13. ______ a. First cash flow occurs one period after agreement begins b. The rate at which money will actually grow during a year c. First cash flow occurs on the first day of the agreement d. The amount of money that a dollar will grow to e. Amount of money paid/received in excess of amount borrowed/lent f. Obligation to pay a sum of cash, the amount of which…
- Chapter 10 Discussion Q2 A perpetuity will pay $900 per year, starting five years after the perpetuity is purchased. What is the present value (PV) at time 0, given that the interest rate is 11%? Show your steps. A) $2695 B) $4312 C) $5390 D) $32347. Future value of annuities There are two categories of cash flows: single cash flows, referred to as “lump sums,” and annuities. Based on your understanding of annuities, answer the following questions. A. Which of the following statements about annuities are true? Check all that apply. An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period. Ordinary annuities make fixed payments at the beginning of each period for a certain time period. An annuity is a series of equal payments made at fixed intervals for a specified number of periods. An annuity due earns more interest than an ordinary annuity of equal time. B. Which of the following is an example of an annuity? A lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time An investment in a certificate of deposit (CD) C. Luana loves shopping…An annuity due is one in which _____. a. payments or receipts occur at the beginning of each period b. payments or receipts occur at the end of each period c. cash flows occur continuously d. payments or receipts occur forever