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Suppose you are going to receive $17,500 per year for five years. The appropriate interest rate is 10 percent.

Requirement 1:

a) What is the present value of the payments if they are in the form of an ordinary annuity? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Present value $

b) What is the present value of the payments if the payments are an annuity due? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Present value $

Requirement 2:

a) Suppose you plan to invest the payments for five years. What is the future value if the payments are an ordinary annuity? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Future value $

b) What is the future value if the payments are an annuity due? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Future value $

Requirement 3:

a) Which has the higher present value, the ordinary annuity or annuity due? b) Which has the higher future value?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91548025

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