An annuity-due makes payments of $15 every other year, with the first payment beginning immediately. The annuity-due makes ten payments. The nominal annual interest rate compounded semiannually is 5%. Calculate the present value of the annuity due. O a. 100.0958 O b. 93.2775 O c. 66.7310 O d. 124.3700 e. 133.4620
An annuity-due makes payments of $15 every other year, with the first payment beginning immediately. The annuity-due makes ten payments. The nominal annual interest rate compounded semiannually is 5%. Calculate the present value of the annuity due. O a. 100.0958 O b. 93.2775 O c. 66.7310 O d. 124.3700 e. 133.4620
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:An annuity-due makes payments of $15 every other year, with the first
payment beginning immediately. The annuity-due makes ten payments. The
nominal annual interest rate compounded semiannually is 5%. Calculate the
present value of the annuity due.
a. 100.0958
O b. 93.2775
O c. 66.7310
d. 124.3700
O e. 133.4620
Expert Solution
Introduction,
The present value of an annuity due is the value today of a series of equal cash flows that occur at the beginning of each period for a fixed number of periods. An annuity due is different from an ordinary annuity because the cash flows occur at the beginning of each period, rather than at the end.
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