What four conditions must exist in solving measurement problems involving the use of annuities?
What will be an ideal response?
1) The periodic cash flows are equal in amount.2) The time periods between the cash flows are the same length.3) The interest rate is constant for each time period.4) The interest is compounded at the end of each time period.
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Using the compound interest tables, answer each of the following questions. Required: a.Assuming that $100,000 to be paid at the end of ten years has a present value today of $50,834.90, what interest rate compounded annually is used in the calculation of the present value?b.What amount must be deposited today if $200,000 is to be accumulated six years from today, and interest at 12% is compounded semiannually?
What will be an ideal response?
Solve the problem.You have a choice between a 30-year fixed rate loan at 4.5% and an ARM with a first-year rate of 2.5%. The ARM rate rises to 6.5% at the start of the third year. Neglecting compounding and changes in principal, estimate your monthly savings with the ARM during the first year on a $180,000 loan.
A. $280 B. $320 C. $300 D. $350
Find the exact value of the expression.cos 
A. 
B. 
C. 
D. 
Match the diagrams with the concepts by writing the identifying letter of the diagram on the blank line to the left of the concept. "VAL" represents the value to be calculated.
Concept ___1.
Future value of $1 ___2.
Present value of $1 ___3.
Future value of an annuity due of $1 ___4.
Future value of an ordinary annuity of $1 ___5.
Present value of an ordinary annuity of $1 ___6.
Present value of an annuity due of $1
What will be an ideal response?