Which annuity is more valuable

Assignment Help Financial Accounting
Reference no: EM133007272

Problem 1: If the going interest rate is 10 percent, the PV of a 5-year $1,000 annuity is $3,790.79. The PV of a 25-year $450 annuity is $4,000. Which annuity is more valuable?

Group of answer choices

Option 1: You cannot tell from the information given.

Option 2: It depends on an individual's preferences.

Option 3: The $1,000 annuity

Option 4: The $450 annuity

Reference no: EM133007272

Questions Cloud

How much will the dollar value of the consol change : A British Consol will pay $50 each year indefinitely. If market interest rate rises to 6 percent, by about how much will the dollar value of the consol change?
Explain how each of the transactions would be : Explain (together with relevant calculations) how each of the above transactions would be dealt with in the 2020 statement of profit or loss
Explain whether accountant has proposed correct treatment : Rover Ltd has a year-end of 30 June 2021. Explain whether the accountant has proposed the correct treatment and, if not, what the required treatment should be?
Make the journal entries for issue of the convertible notes : Make the journal entries for the issue of the convertible notes and the payment of interest at the 31 December 2022 and 31 December 2021 dates
Which annuity is more valuable : Which annuity is more valuable? If the going interest rate is 10 percent, the PV of a 5-year $1,000 annuity is $3,790.79. The PV of a 25-year $450
What is the bad debt expense for the year for jakobi jeweler : Jakobi reported sales of $1,000,000 and recorded accounts receivables write-offs of $10,000. What is the bad debt expense for the year 2020?
Compute the working capital and the current ratio for year : Compute the working capital and the current ratio for Year 2 and Year 1. What conclusions concerning the company's ability to meet its financial?
Discuss consequences of workplace harassments : Analyse organisational culture at QBE and identify what makes its ethical climate strong and Discuss power imbalance between CEO Pat Regan and the anonymous
What price should Heavenly Day Spa charge : Assume the Day Spa applies a cost-based pricing model to set prices to customers, adding a mark-up of 30%. What price should Heavenly Day Spa charge

Reviews

Write a Review

Financial Accounting Questions & Answers

  What is the net income by total assets

The primary thing that this more sophisticated measure of ROA better captures that the simpler version, defined as ROA* = Net Income / Total Assets, is?

  Determine variances between the visits and clinic revenues

Determine the variances between the visits and the clinic revenues for planned and actual budgets. Label each as favorable or unfavorable

  Which is a direct skip

Which is a direct skip? Grandfather, 80 years old, transfers $100,000 into a trust in which his 41-year-old son is the income beneficiary and his 3-year-old

  Make the journal entry using the book value method

Assume, instead, that Sandhill Corp. decides to retire the bonds early, on January 1, 2022,Prepare the journal entry using the book value method.

  What is the amount of louise tax refund

Louise has a tax liability before any tax credits and payments - Income taxes withheld form wages: $1,500. What is the amount of Louise tax refund

  What is the value of better than that is purchases on credit

During 2017, Better Than That paid $20,338 in cash to its creditors. What is the value of Better Than That's purchases on credit in 2017?

  Prepare journal entries to reflect the carrying amount

Prepare journal entries to reflect the difference between the carrying amount and market value for the above investments at Pina Colada's year

  Discuss the client organisation could take to prevent

Discuss what action, if any, the client organisation could take to prevent any adverse consequences associated with the new standard.

  Identify the cash flows

You are trying to evaluate the economics,Identify the cash flows, their timing and the required rate of return applicable to valuing investing in the apartment?

  Give an example of an american company

Accrued expense Journal Entry is the journal entry passed, Give an example of an American company that uses accrual journal entries for their organization.

  How much of a percentage premium over the market price

Assuming the stock market is efficient, why would one company be prepared to pay a premium over current market value to acquire another

  Which of the assets will be subject to probate

Avoiding probate is a primary concern for Malek. Which of the following assets will be subject to probate? A personal residence owned JTWROS with a child.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd