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Questions under (f)(1), f(2), f(3) are already solved with using**More:**

**Questions undere. What?s the difference between an ordinary annuity and an annuity due?**

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**Answer: The difference between ordinary annuity and annuity due is that in ordinary**

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**annuity there is equal and consecutive payments that are paid at the end of each period,**

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**while on annuity due these payments are made at the beginning of each period and the last**

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**payment will stop one period before the end of the specified period.**

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**What type of annuity is shown below?**

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**Answer: The type of annuity shown below is called an ordinary annuity.**

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**How would you change the timeline to show the other type of annuity?**

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**Answer: The above annuity can be changed to an annuity due as follows.**

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**f. (1) What?s the future value of a 3-year ordinary annuity of $100 if the appropriate interest rate**

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**is 10%?**

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**Answer: $331**

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**Method 1**

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**Add formula method, indication formula used and then its DETAILED implication.**

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**Method 2**

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** (2) What?s the present value of the annuity?**

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**Answer: $248.69**

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**Method 1**

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**Add formula method, indication formula used and then its DETAILED implication.**

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**Method 2**

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**(3) What would the future and present values be if the annuity were an annuity due?**

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**Answer: future value is $364.10; present value is $273.56**

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**Method 1**

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**Add formula method, indication formula used and then its DETAILED implication.**

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**Method 2**

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***set calculator to begin mode:**

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***set calculator to begin mode**

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** g.**

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**What is the present value of the following uneven cash flow stream? The appropriate**

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**interest rate is 10%, compounded annually.**

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**0**

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**1**

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**2**

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**3**

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**0**

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**100**

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**300**

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**300**

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**4**

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**-50**

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**Please answer questions using 2 methods: formula implication, indicating the formula itself and**

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**then its detailed application; calculator method.**

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This question was answered on: * Feb 21, 2020 *

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