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Why the effective interest rate method is preferred method

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Reference no: EM131515924

Discussion: "Annuities and Bonds"

Please respond to the following:

• Assume that you are advising your 25-year-old nephew on investing in an annuity. Discuss with him the primary benefits of the various types of annuities, and recommend one annuity to him. Provide specific examples on the salient manner in which the annuity that you recommended would provide the greatest benefit to your nephew upon his retirement at age of 65.

• Compare and contrast the straight line method and the effective interest rate method of amortization. Defend or critique FASB's position on the reasons why the effective interest rate method is the preferred method for amortizing a discount or premium. Justify your response.

Reference no: EM131515924

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