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.