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With a zero interest rate both the present value and the
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- The future value of an ordinary annuity for any given interest rate and number of periods is always less than the future value of an annuity due for the same interest rate and number of periods. True or False?what would happen if interest rate is doubled in ordinary annuity?The Present Value of an Ordinary Annuity is identical to the Present Value of an Annuity Due. This statement is : a Indeterminate. b True. c False. d None of the abov
- The present value of a perpetuity is equal to the payment on the annuity, PMT, divided bythe interest rate, I : PV = PMT/I. What is the future value of a perpetuity of PMT dollars peryear? (Hint: The answer is infinity, but explain why.)If you know the present value of an ordinary annuity, how can you find the PV of thecorresponding annuity due?1. Which statement is FALSE? A. Future value annuity is an example of annuity. B. A perpetuity is an annuity that has maturity period. C. An annuity is a series of equal payment made for a specified number of years. D. Ordinary annuity is an annuity in which the cash flows occur at the end of each period.
- The present value of an annuity due of t payments of $1 per period is the same as Multiple Choice (C) (1 + r) times the present value of an equivalent ordinary annuity. (A) the present value of an ordinary annuity of t payments. (B) $1 plus the present value of an ordinary annuity with t -1 payments. None of the answers are correct. (B) and (C).Annuity A and B are exactly the same except that annuity A has an interest rate of 4% and annuity B has an interest rate of 5%, which one has the higher future value? Select one: a. B b. A=B c. AFor any investment, which will always have the higher future value : an ordinary annuity or an annuity due? For any debt, which will always have a higher future value: an ordinary annuity or an annuity due?
- The larger the periodic payment of an annuity, the greater its present value. True or False?In the present value of an annuity due table, the factors ________. Group of answer choices decrease as the interest rates increase, given a set number of periods decrease as the periods increase, given a set interest rate increase as the periods decrease, given a set interest rate increase as the interest rates increase, given a set number of periodsUsing an annuity, you may calculate the present value of a single payment or a series of payments you will receive. Is this statement correct or incorrect?