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Future value at the end of year

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Reference no: EM13256522

Miss Nadia has to choose the better of two equally costly cash flow streams, annuity A and annuity B. Annuity A is an annuity due with a cash inflow of Rs. 9,000 for each of 6 years. Annuity B is an ordinary annuity with a cash inflow of Rs. 10,000 for each of 6 years. Assume that Nadia can earn 15 percent on her investments.

REQUIRED:

a. Find the future value at the end of year 6, FVA6, for both annuities.

b. Use your findings in part a to indicate which annuity is more attractive. Why?

Reference no: EM13256522

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