Reference no: EM13850729
1-As you increase (decrease) the length of time involved, what happens to the present value of an annuity? Explain why.
2-As you decrease (increase) the length of time involved, what happens to the future value of an annuity? Explain why.
3-What happens to the future value of an annuity if you increase (decrease) the interest rate? Explain why.
4-What happens to the present value of an annuity if you decrease (increase) the interest rate? Explain why.
5-What is the relationship between the future value (or present value) of an annuity due and an ordinary annuity expressed as an equation?
6-If you were an athlete negotiating a contract, would you want a big signing bonus payable immediately and smaller payments in the future, or would you want a small signing bonus payable immediately and larger payments in the future? Explain your answer.
7-Should lending laws be changed to require lenders to report EAR’s instead of APR’s? Why or why not?
8-On subsidized Stafford loans, a common source of financial aid for college students, interest does not begin to accrue until repayment begins. Who receives a bigger subsidy, a freshman or a senior? Explain.
9-What does continuous compounding mean?
10-In general, what is the relationship between a stated interest rate and an effective interest rate? Which is more relevant for financial decisions?
11-Which would be the LARGER dollar value, the future value of an ordinary annuity or the future value of an annuity due? Explain why.
12-Which would be the LARGER dollar value, the present value of an ordinary annuity or the present value of an annuity due? Explain why.
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What does continuous compounding mean
: As you increase (decrease) the length of time involved, what happens to the present value of an annuity? Explain why. What happens to the future value of an annuity if you increase (decrease) the interest rate? Explain why. What does continuous compo..
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