Annuity I and annuity II both provide payments at the end of each two-year period for twenty years. Annuity I pays $1,000 and the end of each period and annuity II pays $1,000 at the end of the first period and increases the payment by $1,000 in each subsequent period so that at the end of the tenth period it pays $10,000. The present value at a 2% nominal annual interest rate compounded semiannually of annuity I and annuity II are calculated, that of annuity I being $8,087. In which of the following ranges is the present value of annuity II?
Annuity I and annuity II both provide payments at the end of each two-year period for twenty years. Annuity I pays $1,000 and the end of each period and annuity II pays $1,000 at the end of the first period and increases the payment by $1,000 in each subsequent period so that at the end of the tenth period it pays $10,000. The present value at a 2% nominal annual interest rate compounded semiannually of annuity I and annuity II are calculated, that of annuity I being $8,087. In which of the following ranges is the present value of annuity II?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 26P
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