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4. Present value of an annuity - Consider the following cases. Case Amount of annuity Interest rate Period (years) A $ 12,000 6% 4 B

4. Present value of an annuity - Consider the following cases.

Case Amount of annuity Interest rate Period (years)

A $ 12,000 6% 4

B 55,000 11 % 16

C 700 19% 10

D 140,000 4% 8

E 22,500 9% 6

a. Calculate the present value of the annuity, assuming that it is

(1) An ordinary annuity.

(2) An annuity due.

b. Compare your findings in parts a(1) and a(2). All else being identical, which type

of annuity

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