208 PART 2 Financial Tools LG3 P5-20 Present value of an annuity Consider the following cases. Case Amount of annuity Interest rate Period (years 7% 12,000 55,000 15 700 140,000 22,500 Calculate the present value of the annuity, assuming that it is (1) An ordinary annuity. (2) An annuity due a. 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. Personal Finance