ultles CONTENT FEEDBACK Question Annuity A requires annual contributions over 5
ID: 2816469 • Letter: U
Question
ultles CONTENT FEEDBACK Question Annuity A requires annual contributions over 5 years and pays 5% annual interest. Annuities B and C have the same interest rate and annual contributions, but have a term of 10 and 30 years respectively. Each annuity has $50, 000 in it at the end of its term. Which of the following answers correctly lists all of the annuities that have a greater amount of interest in them than the sum of contributions over their term? Select the correct answer below: O Annuity C O Annuity A O Annuity B O Annuity B and C NextExplanation / Answer
Annuity A
Amount of annuity = Using PMT function in MS excel
PMT(5%,5,0,50000,0)
($9,048.74)
present value of annuity payment =Using PV function in MS excel
PV(5%,5,-9048.74,0,0)
$39,176.31
amount of interest earned
50000-39176.31
$10,823.69
Annuity B
Amount of annuity = Using PMT function in MS excel
PMT(5%,10,0,50000,0)
($3,975.23)
present value of annuity payment =Using PV function in MS excel
$17,210.67
$17,210.66
amount of interest earned
50000-17210.67
$32,789.34
Annuity C
Amount of annuity = Using PMT function in MS excel
PMT(5%,30,0,50000,0)
($752.57)
present value of annuity payment =Using PV function in MS excel
$3,258.23
$3,258.24
amount of interest earned
50000-3258.24
$46,741.76
Answer is annuity B & C
Annuity A
Amount of annuity = Using PMT function in MS excel
PMT(5%,5,0,50000,0)
($9,048.74)
present value of annuity payment =Using PV function in MS excel
PV(5%,5,-9048.74,0,0)
$39,176.31
amount of interest earned
50000-39176.31
$10,823.69
Annuity B
Amount of annuity = Using PMT function in MS excel
PMT(5%,10,0,50000,0)
($3,975.23)
present value of annuity payment =Using PV function in MS excel
$17,210.67
$17,210.66
amount of interest earned
50000-17210.67
$32,789.34
Annuity C
Amount of annuity = Using PMT function in MS excel
PMT(5%,30,0,50000,0)
($752.57)
present value of annuity payment =Using PV function in MS excel
$3,258.23
$3,258.24
amount of interest earned
50000-3258.24
$46,741.76
Answer is annuity B & C
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