Question

In: Finance

When you buy a condo or a coop you get a deed. The future value of...

When you buy a condo or a coop you get a deed.

The future value of a $1 annuity compounded at 5% annually is greater than the future value of a $1 annuity compounded at 5% semi-annually.
Due to statue of frauds all contracts and leases over one month must be in writing

True or False please help

Solutions

Expert Solution

FV of Annuity :

Annuity is series of cash flows that are deposited at regular intervals for specific period of time. Here deposits are made at the end of the period. FV of annuity is future value of cash flows deposited at regular intervals grown at specified int rate or Growth rate to future date.

FV of Annuity = CF [ (1+r)^n - 1 ] / r
r - Int rate per period
n - No. of periods

As the Frequency ofcompounding increases, FV of annuity will increase.

FV of annuity with semi annual compounding will be more than FV of annuity with annual compounding.

However the statment made is FV of annuity with annual compoudning is more than FV of annuity with semi annaul compounding.

Hence the statement made in question is False

jeff jeffy answered 2 years ago
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