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26 of 30 > -/1 C View Policies Current Attempt in Progress Out Which of the following tables would show the smallest factor f
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Answer #1

OPTION A IS CORRECT ie Present Value of ordinary annuity of 1

Let us check out with the following data:

(a) Present Value Ordinary Annuity = Cash Flow * (1- (1 + Interest Rate) -n / i

= 1 (1- 1+ .12) -4 / .12

= $2.99

(b) Future Value of Annuity Due = {Cash Flow * (1- (1 + Interest Rate) n - 1} / i

= $5.44

(c) Future Value of Ordinary Annuity = {Cash Flow * (1- (1 + Interest Rate) -n - 1} / i

= $4.83

(d) Present Value Annuity Due = Cash Flow * (1- (1 + Interest Rate) n / i

  = $3.37

NOTE: For any query, feel free to ask in the comment section!

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