This problem demonstrates the dependence of an annuity's present value on the compounding frequency. What minimum initial amount will sustain a 25-year annuity paying $1000 at the end of each year if the initial amount can be invested to earn:
a. 6% compounded annually?
b. 6% compounded semiannually?
c. 6% compounded quarterly?
d. 6% compounded monthly?

Question

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The Answer of This problem demonstrates the dependence of an annuity's present value on the compounding frequency. What minimum initial amount will sustain a 25-year annuity paying $1000 at the end of each year if the initial amount can be invested to earn:
a. 6% compounded annually?
b. 6% compounded semiannually?
c. 6% compounded quarterly?
d. 6% compounded monthly?

This Problem Demonstrates the Dependence of an Annuity's Present Value