Study Questions
6–1. What is an annuity? Give some examples of annuities.
6–2. How do you calculate the future value of an annuity?
6–3. What is the relationship between the present value interest factor (from Chapter 5) and the annuity present value interest factor (from Equation [6–2] )?
6–4. Assume you bought a home and took out a 30-year mortgage on it 10 years ago. How would you determine how much principal on your mortgage you still have to pay off?
6–5. Distinguish between an ordinary annuity and an annuity due.
6–6. What is a level perpetuity? A growing perpetuity?
6–7. How do you calculate the present value of an annuity? A perpetuity? A growing perpetuity?
6–8. With an uneven stream of future cash flows, the present value is determined ...
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