10 Annuity A has a present value of 100000 and makes 20 paym

10. Annuity A has a present value of $100,000 and makes 20 payments. Annuity B has a present value of $100,000 and makes 18 payments. All else equal, which one has the higher payment? A. A ?.? C. Not enough information to determine.

Solution

10.B.

annuity B will make higher payments, since the payment periods are less all else being constant.

13.C.Your friends investment will have the higher future value.

since your freind invests monthly $100 , his investment by the end of year becomes more than $1200 because of compounding.

15.B.semi annual payments of $250 for 17 years.

the semi annual payments of $250 for 17 years will have a higher value than the annual payments of $500 for 17 years, because of compounding factor, interest rates being the same.