You Are Considering Two Annuities,both of Which Pay a Total

question 129

Essay

You are considering two annuities,both of which pay a total of $20,000 over the life of the annuity.Annuity A pays $2,000 at the end of each year for the next 10 years.Annuity B pays $1,000 at the end of each year for the next 20 years.Which annuity has the greater value today?
Is there any circumstance where the two annuities would have equal values as of today?
Explain.

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Definitions:

Referendum

A direct vote by the electorate on a specific proposal or issue, bypassing the legislative body.

Congressional Election

The process by which members are elected to the United States Congress, consisting of the Senate and the House of Representatives.

Elected Official

An individual who has been chosen by voters to hold a public office through a democratic electoral process.

Direct Democracy

Direct democracy is a form of government in which citizens directly participate in the decision-making processes, rather than through elected representatives, often through referendums and initiatives.