Author Question: Which is greater, the present value of a five-year ordinary annuity of 300 discounted at 10, or the ... (Read 69 times)

appyboo · **on:** Jul 10, 2018

Which is greater, the present value of a five-year ordinary annuity of 300 discounted at 10, or the present value of a five-year ordinary annuity of 300 discounted at 0 that has its first cash flow six years from today?

A) The first annuity because the cash flows occur sooner.
B) The second annuity because the cash flows are discounted at a 0 interest rate.
C) The two annuities are of equal value.
D) The answer to this question cannot be determined.

Question 2

The Vanguard Windsor II mutual fund had a net asset value of 15.07 at the beginning of 1992 and 24.04 at the beginning of 1997.

What was the approximate average annual growth rate in this measure over this period? (Round to the nearest whole number)
A) 60
B) 8
C) 10
D) 18
E) 15

allisonblackmore · **Reply #1 on:** Jul 10, 2018

Answer to Question 1

Answer: B
Explanation: B)
PV = PMT = 300 = 1,137.24 vs. the cash flows discounted at 0.0 that have a PV of 1,500.
MODE = END
INPUT 5 10 ? -300 0
KEY N I/Y PV PMT FV
CPT 1,137.24

Answer to Question 2

C