Present value of a) Lump Sum and b) annuit

A fixed stream of cash flows occurring at the beginning of each period for a fixed period of time is known as:            Select one: a. Ordinary annuity b. Constant annuity c. Annuity due d. Financial annuity

In the time diagram below, which of the following concepts is depicted? 0 PV $1 2 $1 3 $1 O Present value of an annuity due O Future value of an ordinary annuity Present value of an ordinary annuity Future value of an annuity due 4 $1

4. Future value of annuities There are two categories of cash flows: single cash flows, referred to as "lump sums," and annuities. Based on your understanding of annuities, answer the following questions. Which of the following statements about annuities are true? Check all that apply Ordinary annuities make fixed payments at the beginning of each period for a certain time period. An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period. An annuity due earns more interest than an ordinary annuity of equal time. An annuity is a series of equal payments made at fixed intervals for a specified number of periods Which of the following is an example of an annuity? 0 A job contract that pays a regular monthly salary for three years O A job contract that pays an hourly wage based on the work done on a particular day Katie had a high monthly food bill before she decided to cook at home every day in order to reduce her expenses. She starts to…

PV = Cash Flow/Interest Rate is the present value shortcut formula for which of the following: * A perpetuity A single cash flow in the future A growing perpetuity An annuity

Direction: Define, draw the cash flow diagram, and write the general formula of the following: ANNUITY 1. Ordinary Annuity a) Sum/Future of Ordinary Annuity b) Present Worth of Ordinary Annuity 2. Annuity Due 3. Deferred Annuity

Annuity Present Value Inputs Payment Discount Rate/Period Number of Periods Present Value using a Time Line Period Cash Flows Present Value of Each Cash Flow Present Value Annuity Present Value using the Formula Present Value Annuity Present Value using the PV Function Present Value

Define the present value of a single amount.

Show that the present value of annuaity due is one period accumulated value of the present value of annuity immediate.

Which figure of merit provides an interest rate at which the present value of the future cash flows equals the amount invested? a) NPV b) IRR c) Cap Rate d) DCF   Please ensure accuracy and explain your choice