Calculations for an ordinary annuity vs an annuity due
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CASE AMOUNT OF ANNUITY INTEREST RATE DEPOSIT PERIOD (YR)
A $2,500 8% 10YRS
B 500 12 6
C 30,000 20 5
D 11,500 9 8
E 6,000 14 30
a. CALCULATE THE FUTURE VALUE OF THE ANNUITY ASSUMING THAT IT IS
1. An ordinary annuity
2. An annuity due
b. Compare your findings in a(1) and a (2). All else identical, which type of annuity - ordinary or annuity due - is preferable? Please explain why.
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Calculations for an ordinary annuity vs an annuity due
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Future value of annuity-
CASE AMOUNT OF ANNUITY INTEREST RATE DEPOSIT PERIOD (YR)
A $2,500 8% 10YRS
B 500 12 6
C 30,000 20 ...
Purchase this Solution
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