PV-Ordinary Annuity. 9-16 Find the present values of the following ordinary annuities: a. Various Compounding Periods PV of $400 each six months for five years at a simple rate of 12 percent, compounded semiannually b. PV 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 present value of the annuity in part (b) is $31.46 greater than the one in part (a). Why does this occur?
PV-Ordinary Annuity. 9-16 Find the present values of the following ordinary annuities: a. Various Compounding Periods PV of $400 each six months for five years at a simple rate of 12 percent, compounded semiannually b. PV 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 present value of the annuity in part (b) is $31.46 greater than the one in part (a). Why does this occur?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA3: Time Value Of Money
Section: Chapter Questions
Problem 11E
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Transcribed Image Text:PV-Ordinary Annuity.
9-16 Find the present values of the following ordinary annuities:
a.
Various Compounding
Periods
PV of $400 each six months for five years at a simple rate of 12 percent,
compounded semiannually
b. PV 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 present value of the annuity
in part (b) is $31.46 greater than the one in part (a). Why does
this occur?
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