Calculate the Difference in the Current Economic Values of the Following

question 1

Multiple Choice

Calculate the difference in the current economic values of the following two annuities: #1: Payments of $300 made at the end of every month for the next five years. #2: Payments of $200 made at the end of every month for the next 10 years. Use an interest rate of 14.4% compounded monthly for both annuities.

• A) Annuity #1 is worth $398 more than Annuity #2.
• B) Annuity #1 is worth $95 more than Annuity #2.
• C) The current economic values are within $10 of each other.
• D) Annuity #2 is worth $95 more than Annuity #1.
• E) Annuity #2 is worth $398 more than Annuity #1.

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