Difference between ordinary annuity and annuity due

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Reference no: EM132054476

1. What’s the present value of $300 to be received in 3 years if the interest rate is 4%, annual compounding? Please draw the time line and list the inputs of your financial calculator.

2. What annual interest rate would cause $300 to grow to $338.20 in 3 years? Please draw the time line and list the inputs of your financial calculator.

3. If a company’s sales are growing at a rate of 10% annually, how long will it take sales to double? Please draw the time line and list the inputs of your financial calculator.

4. What’s the difference between an ordinary annuity and an annuity due? Please respectively draw the time lines of an ordinary annuity and an annuity due based on the following information: I saved $700 in an investment account now. This account will generate three-year annuity payments with $300 each year. After three years, my savings are exhausted.

5. What is the future value of a 3-year, $300 ordinary annuity if the annual interest rate is 4%? Please draw the time line and list the inputs of your financial calculator.

6. What is its present value? Please draw the time line and list the inputs of your financial calculator.

7. What would the future and present values be if it was an annuity due? Please draw the time line and list the inputs of your financial calculator.

Reference no: EM132054476

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