What is future value if the payments are ordinary annuity

Assignment Help Financial Management

Reference no: EM131575757

Suppose you are going to receive $15,000 per year for five years. The appropriate interest rate is 8 percent.

Requirement 1:

a) What is the present value of the payments if they are in the form of an ordinary annuity? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Present value $

b) What is the present value of the payments if the payments are an annuity due? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Present value $

Requirement 2:

a) Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Future value $

b) What is the future value if the payments are an annuity due? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Future value $

Requirement 3:

a) Which has the higher present value, the ordinary annuity or annuity due?

Annuity dueOrdinary annuity

b) Which has the higher future value?

Ordinary annuityAnnuity due

Reference no: EM131575757

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