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    Compounding of Interest,Present & Future Value of Investment

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    Explain how annuities affect TVM problems and investment outcomes with the impact of the following items listed below - this does not have to be exstensively long

    a. Interest Rates and Compounding
    b. Present Value (of a future payment received)
    c. Future Value (of an investment)
    d. Opportunity cost
    e. Annuities and the Rule of '72

    Pls indicate any sources that may be used

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    Solution Preview

    Case1.Interest Rates and Compounding ::http://www.annuityadvantage.com/annuitydatasearch.htm, site can help in this. With increase in interest rate the amount of annuities will increase and it will be in proportion of increase of interest rate, compounding impact can be seen in financial planning toolkit in the above site , here rise will be at faster , the same can be calculated with the above toolkit.

    Case2.Present Value (of a future payment received): the same can be calculated on basis of the table at http://www.netmba.com/finance/time-value/annuity/ site.If we ...

    Solution Summary

    The expert discusses the impacts of interest rates on Annuity, compounding of interest and present and future value of investment.