Response to the following questions:
1. Distinguish between the present value of an annuity due and the present value of a deferred annuity. Draw a time line of each.
2. Explain how to solve each of the following without tables (in each case use the quickest approach possible):
a. The present value of $10,000 for four years at 10% compounded annually
b. The present value of $5,000 for five years at 10% [start with information developed in (a)]
c. The future value of five cash flows of an ordinary annuity of $3,000 each at 10% compound interest.