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Calculations for an ordinary annuity vs an annuity due

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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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 ...

Solution Summary

Calculations for an ordinary annuity vs an annuity due

$2.19