What is the difference between present value of a single sum and present value of an...
What is the difference between present value of a single sum and present value of an ordinary annuity? What is the differences between Future Value of single sum and future value of an ordinary annuity?
Homework Answers
ANSWER:
(1)
In case of present value of single sum, a single amount from future is discounted by a given rate to its value in present.
In case of present value of ordinary annuity, a series of amount occurring at the end of each period of time is discounted by a given rate to their value in present.
(2)
In case of future value of single sum, a single amount from present is compounded by a given rate to its value in future period.
In case of future value of ordinary annuity, a series of amount occurring at the end of each period of time is compounded by a given rate to their value in future period.
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