Marian kirk wishes to select the better of two 10-year annuities, c and d. annuity c is an ordinary annuity of $2,500 per year for 10 years. annuity d is an annuity due of $2,200 per year for 10 years.
a. find the future value of both annuities at the end of year 10, assuming that marian can earn
(1) 10% annual interest and
(2) 20% annual interest.
b. use your findings in part a to indicate which annuity has the greater future value at the end of year 10 for both the
(1) 10% and
(2) 20% interest rates.

Instructions are listed below

Explanation:

Giving the following information:

Two 10-year annuities:

Annuity C: $2,500 per year for 10 years.

Annuity D: $2,200 per year for 10 years.

To find the future value we need to use the following formula:

FV=PV*(1+i)^n

PV: Present value

i= interest rate

A)

1.

Annuity C= 2500*(1,10^10)= $6484.36

Annuity D= 2200*(1.10^10)= $5706.23

2.

Annuity C= 2500*(1,20^10)= $15479.34

Annuity D= 2200*(1.20^10)= $13621.82

B) Annuity C presents a greater future value in both cases because it presents a bigger present value.

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