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You Are Considering Two Annuities, Both of Which Make Total

question 48

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You are considering two annuities, both of which make total annuity payments of $10,000 over their
life. Which would be worth more today: annuity A, which pays $1,000 at the end of each year for the
next 10 years, or annuity B, which pays $775 at the end of the first year, but the annuity payment
grows by $50 each year, reaching $1,225 at the end of year 10? Are there any circumstances in
which the two would be equal? Explain.


Definitions:

Albumin

A protein made by the liver that keeps fluid in the bloodstream and carries vitamins, enzymes, and hormones.

Fresh Frozen Plasma

A blood product made from the liquid portion of whole blood, quick-frozen to preserve clotting factors, used in treatments requiring coagulation support.

Packed Red Blood Cells

Concentrated red blood cells that have been separated from plasma and other components, commonly used in transfusions to treat anemia.

Laboratory Blood Bank

A specialized section in a laboratory for storing, processing, and distributing blood and its components for transfusion.

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