A machine with a cost of $85,000 has an estimated residual value of $5,000 and an estimated life of 5 years or 20,000 hours. Wha
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Answer:
D. For a higher interest rate, an annuity has a smaller future value
Explanation:
If the interest rate increases, then the capitalization factor on the annuity increases making the annuity future valeu increase:
on the capitalziation factor we got rate in both part of the division:
on the top part is being added a unit and power to t
while in the other it doesn't change.
While it is true that a higher dividend makes the quotient decrease, the increases in the top part exceeds by far the increase in the bottom part, making increase the quotient.