Question
2. You are comparing two annuities. Annity A pay $100 at the end of each month for 5 years. Annuit B pays $100 at the
2. You are comparing two annuities. Annity A pay $100 at the end of each month for 5 years. Annuit B pays $100 at the beginning of each month for 5 years. The rate of return on both annuities is 6 percent. Which one of the following statements is correct given this information? Explanation
Annuity A has a higher future value than Annuity B, but a lower present value than Annuity B.
Annuity B has a higher future value than Annuity A, but a lower present value than Annuity A.
Annuity B has both a higher present value and a higher future value than Annuity A.
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