Future value: annuity versus annuity due
What's the future value of a 5%, 5-year ordinary annuity that pays $600 each year? Round your answer to the nearest cent.
If this was an annuity due, what would its future value be? Round your answer to the nearest cent.
Problem 1.
Present and future values of a cash flow stream
An investment will pay $100 at the end of each of the next 3 years, $250 at the end of Year 4, $400 at the end of Year 5, and $500 at the end of Year 6.
If other investments of equal risk earn 6% annually, what is its present value? Round your answer to the nearest cent.
If other investments of equal risk earn 6% annually, what is its future value? Round your answer to the nearest cent.
Problems 2.
Effective rate of interest
Find the interest rates earned on each of the following. Round each answer to two decimal places.
You borrow $750 and promise to pay back $795 at the end of 1 year.
You lend $750 and the borrower promises to pay you $795 at the end of 1 year.
You borrow $89,000 and promise to pay back $246,805 at the end of 9 years.
You borrow $15,000 and promise to make payments of $4,058.60 at the end of each year for 5 years.