How does the present value of a lump sum compare to the present value of an annuity?

How does the present value of a lump sum compare to the present value of an annuity?.

Part one:

Answer these questions (for quantitative questions, show your work):

How does the present value of a lump sum compare to the present value of an annuity?

How does the future value of an ordinary annuity compare to the future value of an annuity due?

How does the present value of an annuity compare to the present value of an annuity due?

What’s the value today of $500 received in 3 years if the going rate of interest is 10% per year?

An individual has $3,000 today. What will that be worth in 7 years if the going rate of interest is 4% per year?

What’s the present value of $250 received at the end of each year for the next 8 years if the interest rate is 4.5% per year?

Length: 1-2 pages.


How does the present value of a lump sum compare to the present value of an annuity?

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