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Annuity a Has the Same N and I as Annuity

question 23

Essay

Annuity A has the same n and i as Annuity
B. A's PMT is double B's PMT. Will A's present value be (pick one): (i) double, (ii) more than double, or (iii) less than double the amount of B's present value? Give the reason for your choice.

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Definitions:

Issuance

The process of distributing something, especially financial instruments like stocks or bonds, to investors.

Semiannually

Taking place twice within a year or every half year.

Effective Interest Method

An accounting technique for calculating interest expense on bonds that amortizes discount or premium over the life of the bonds.

Straight-line Method

A depreciation technique that allocates an equal portion of the value of an asset over its useful life, used to gradually reduce the asset's book value.

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