Asked by Bryce Folsom on Apr 26, 2024
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An annuity consists of payments of $700 made at the beginning of every quarter for 5 years. If the annuity earns 8% compounded semiannually, calculate present value.
Compounded Semiannually
Interest calculation technique where interest is added to the principal sum twice a year, enhancing the base amount for future interest calculations.
Present Value
The existing value of a future amount of money or series of payments, factoring in a chosen rate of return.
Beginning of Every Quarter
This refers to the start of each three-month period in a year, often used in financial contexts for reporting and interest calculation.
- Comprehend and compute the present value and future value of cash flows and annuities.
- Compute and contrast the future and present values of annuities, considering different payment frequencies and rates of interest.
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SB
Learning Objectives
- Comprehend and compute the present value and future value of cash flows and annuities.
- Compute and contrast the future and present values of annuities, considering different payment frequencies and rates of interest.