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Suppose you are going to receive $15,000 per year for five years. The appropriate interest rate is 8 percent.

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 payments are an annuity due?

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

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92258835

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