Which has the higher future value

Assignment Help Financial Management

Reference no: EM132012702

Suppose you are going to receive $13,500 per year for five years. The appropriate interest rate is 7.5%.

a. What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value if the payments are an annuity due?

b. Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? What if the paymetns are an annuity due?

c. Which has the higher present value, the ordinary annuity or annuity due? Which has the higher future value? Will this always be true?

Reference no: EM132012702

Questions Cloud

Calculate the area of the theatre : What formula can you use to calculate the area of the theatre?

How much tax revenue does the government recieve : Suppose that the government imposes a $5 excise tax on each case of beer. The beer industry faces the following demand and supply curves before tax.

Consider the leverage unlimited zero coupon bonds : Consider the Leverage Unlimited, Inc., zero coupon bonds of Year 19. Determine the yield-to-maturity if the bonds are purchased at the following price

Mention what type of test should be used : For each of the following claims, mention what type of test should be used (one-tail, two-tail) and set up the null and alternate hypothesis.

Which has the higher future value : What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value if the payments are an annuity due?

The dividend is expected to remain the same indefinitely : A stock's dividend in 1 year is expected to be $2.7. The dividend is expected to remain the same indefinitely.

What is the profit or loss per share from buying the stock : What is the maximum amount the buyer of the put option can lose? Suppose at the expiration date (after 1 year has elapsed), the price of the stock is at $79

Mass oscillates on a spring about the point : A mass oscillates on a spring about the point x = 0, and is subject to frictional forces. The velocity of the mass at time t is found to be v(t) = -V*e^(-at)

Determine the natural frequencies and mode shapes : Choose coordinates x for displacement c and ? clockwise for the rotation of the uniform bar shown in Fig., and determine the natural frequencies and mode shapes

User Account

All Pages