FV-Ordinary Annuity. Various Compounding 9-15 Find the future values of the following ordinary annuities: a. FV of $400 each six months for five years at a simple rate of 12 percent, compounded semiannually b. Periods FV of $200 each three months for five years at a simple rate of 12 percent, compounded quarterly C. The annuities described in parts (a) and (b) have the same amount of money paid into them during the five-year period and both earn interest at the same simple rate, yet the annuity in part (b) earns $101.75 more than the one in part (a) over the five years. Why does this occur?

FV-Ordinary Annuity. Various Compounding 9-15 Find the future values of the following ordinary annuities: a. FV of $400 each six months for five years at a simple rate of 12 percent, compounded semiannually b. Periods FV of $200 each three months for five years at a simple rate of 12 percent, compounded quarterly C. The annuities described in parts (a) and (b) have the same amount of money paid into them during the five-year period and both earn interest at the same simple rate, yet the annuity in part (b) earns $101.75 more than the one in part (a) over the five years. Why does this occur?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

ChapterM: Time Value Of Money Module

Section: Chapter Questions

Problem 7P: Value of an Annuity Using the appropriate tables, solve each of the following. Required: 1....

See similar textbooks

Similar questions

Value of an Annuity Using the appropriate tables, solve each of the following. Required: 1. Beginning December 31, 2020, 5 equal withdrawals are to be made. Determine the equal annual withdrawals if 30,000 is invested at 10% interest compounded annually on December 31, 2019. 2. Ten payments of 3,000 are due at annual intervals beginning June 30, 2020. What amount will be accepted in cancellation of this series of payments on June 30, 2019, assuming a discount rate of 14% compounded annually? 3. Ten payments of 2,000 are due at annual intervals beginning December 31, 2019. What amount will be accepted in cancellation of this series of payments on January 1, 2019, assuming a discount rate of 12% compounded annually?
Present Value of an Annuity Ralph Benke wants to make 8 equal semiannual withdrawals of 8,000 from a fund that will earn interest at 11 % compounded semiannually. Required: How much would Ralph have to invest on: 1. January 1, 2019, if the first withdrawal is made on July 1, 2019 2. July 1, 2019, if the first withdrawal is made on July 1, 2019 3. January 1, 2019, if the first withdrawal is made on January 1, 2022
Future Value Hugh Colson deposited 20,000 in a special savings account that provides for interest at the annual rate of 12% compounded semiannually if the deposit is maintained for 4 years. Required: Calculate the balance of the savings account at the end of the 4-year period.
An ordinary annuity paying P1,811 at the end of each year for 15 years, is to be converted to an annuity paying an amount at the beginning of each month for 15 years. Money is worth 10% compounded annually. Determine the following: a.) Present Value of the Payment. b.) Amount being paid at the beginning of each month for 15 years. Note: Don't use excel. Use or draw some cashflows.
FV of $200 paid each 6 months for 5 years at a nominal rate of 15% compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent.$ FV of $100 paid each 3 months for 5 years at a nominal rate of 15% compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent.$ These annuities receive the same amount of cash during the 5-year period and earn interest at the same nominal rate, yet the annuity in part b ends up larger than the one in part a. 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 previously-earned interest.The annuity in part (a) is compounded more frequently; therefore, more interest is earned on previously-earned interest.The annuity in part (b) is compounded less frequently; therefore, more interest is…
9-15 Find the future values of the following ordinary annuities: a. FV of $400 each six months for five years at a simple rate of 12 percent, compounded semiannually. b. FV of $200 each three months for five years at a simple rate of 12 percent, compounded quarterly. c. The annuities described in parts (a) and (b) have the same amount of money paid into them during the five-year period and both earn interest at the same simple rate, yet the annuity in part (b) earns $101.75 more than the one in part (a) over the five years. Why does this occur?
Find the present value of $500 due in five years under each of the following conditions: a. 12 percent simple rate, compounded annually b. 12 percent simple rate, compounded semiannually c. 12 percent simple rate, compounded quarterly d. 12 percent simple rate, compounded monthly
Regular contributions of $200 are made at the end of each month for five years into a savings account earning interest at 4% compounded quarterly. The annuity can be classified as: Question 8 options: A) simple general annuity B) perpetuity C) ordinary annuity due D) ordinary general annuity E) ordinary simple annuity
Find i (the rate per period) and n (the number of periods) for the following annuity. Quarterly deposits of $500 are made for 6 years into an annuity that pays 7.5% compounded quarterly. Find i (the rate per period) and n (the number of periods) for the following annuity. Semiannual deposits of $3,100 are made for 15 years into an annuity that pays 5.9% compunded semiannually.