Homework answers / question archive / The Time Value of Money Questions 1) What is the difference between an ordinary annuity and an annuity due? 2) What does the amortization schedule tell you about a loan repayment? 3) If you increase the number of payments on an amortized loan, does the payment increase or decrease? Why or why not? 4) If you increase the interest rate on an amortized loan, does the payment increase or decrease? Why or why not? 5) If you won the lottery and had the choice of the lumpsum payoff or the annuity payoff, what factors would you consider besides the implied interest rate (indifference interest rate) in selec ting the payoff style?  

The Time Value of Money Questions 1) What is the difference between an ordinary annuity and an annuity due? 2) What does the amortization schedule tell you about a loan repayment? 3) If you increase the number of payments on an amortized loan, does the payment increase or decrease? Why or why not? 4) If you increase the interest rate on an amortized loan, does the payment increase or decrease? Why or why not? 5) If you won the lottery and had the choice of the lumpsum payoff or the annuity payoff, what factors would you consider besides the implied interest rate (indifference interest rate) in selec ting the payoff style?  

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The Time Value of Money

Questions

1) What is the difference between an ordinary annuity and an annuity due?

2) What does the amortization schedule tell you about a loan repayment?

3) If you increase the number of payments on an amortized loan, does the payment

increase or decrease? Why or why not?

4) If you increase the interest rate on an amortized loan, does the payment increase or decrease? Why or why not?

5) If you won the lottery and had the choice of the lumpsum payoff or the annuity payoff, what factors would you consider besides the implied interest rate (indifference interest rate) in selec ting the payoff style?