Calculate the present value of an annual payment of $1,100 you would received for 11 years if the interest rate is 4%.

a-1.	Calculate the present value of an annual payment of $1,100 you would received for 11 years if the interest rate is 4%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value

$

a-2.	Calculate the present value of an annual payment of $900 you would received for 16 years if the interest rate is 4%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value

$

a-3.	Which option would you prefer?
	$900 a year for 16 years

b-1.	Calculate the present value of an annual payment of $1,100 you would received for 11 years if the interest rate is 16%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value

$

b-2.	Calculate the present value of an annual payment of $900 you would received for 16 years if the interest rate is 16%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value

$

b-3.	Which option would you prefer?
	$1,100 a year for 11 years

rev: 01_28_2012


Explanation:

You should compare the present values of the two annuities.

a.