Question

The present value of an annuity is the sum of the discounted value of all future cash flows. You have the opportunity to invest in several annuities. Which of the following 10-year annuities has the greatest present value (PV)? Assume that all annuities earn the same positive interest rate. bevinning of each year An annuity that pays $500 at the end of every six months An annuity that pays $1,000 at the beginning of each year An annuity that pays $500 at the beginning of every six months An annuity that pays $1,000 at the end of each year You bought an annuity selling at $12,719.28 today that promises to make equal payments at the beginning of each year for the next 10 years (N). If the annuity's appropriate interest rate (1) remains at 9.50% during this time, then the value of the annual annuity payment (PMT) is You just won the lottery. Congratulations! The jackpot is $35,000,000, paid in 10 equal annaal payments. The first payment on the lottery jackpot will be made today. In present value terms, you really won assuming annual interest rate of 9.50%. 02 -2016 Oracle NE Save & Continue

Answer 1

You have the opportunity to invest in several annuities. Which of the following 10-year annuities has the greatest present value (PV)? Assume that all annuities earn the same positive interest rate. An annuity that pays $500 at the end of every six months The annuity which will pay higher An annuity that pays $1,000 at the beginning of each year cashflows at the beginning will An annuity that pays $500 at the beginning of every six months have the greatest PV. An annuity that pays $1,000 at the end of each year You bought an annuity selling at $12,719.28 today that promises to make equal payments at the beginning of each year for the next 10 years (N). If the annuity's appropriate interest rate (1) remains at 9.50% during this time, then the value of the annual annuity payment (PMT) is $1,850 PMT= $-1,850.00 =PMT(9.5%,10,12719.28,,1) You just won the lottery. Congratulations. The jackpot is $35,000,000, paid in 10 equal annaal payments. The first payment on the lottery jackpot will be made today. In present value terms, you really won $24,063,493.47 - assuming annual interest rate of 9.50%. PV = $ 2,40,63,493.47 PV(9.5%, 10,-35000000/10,,1)

I can only answer 1 question at a time, so I am answering only question 7. Please do rate me and mention doubts, if any, in the comments section.