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    Future value of an ordinary annuity and an annuity due

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    For each case in the accompanying table, answer the questions that follow.

    Case Amount of annuity rate (years)

    A $ 2,500 8% 10
    B 500 12 6
    C 30,000 20 5
    D 11,500 9 8
    E 6,000 14 30

    ii) a. Calculate the future value of the annuity assuming that it is
    iii) (1) An ordinary annuity.
    iv) (2) An annuity due.
    v) b. Compare your findings in parts a(1) and a(2). All else being identical, which type of annuity - ordinary or annuity due - is preferable? Explain why.

    Please present solution in Excel.

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    Solution Summary

    The solution explains the calculation of future value of an ordinary annuity and an annuity due