4.(a) What is the future value of a 4-year ordinary (regular) annuity of $2,750 if the appropriate interest rate is 5.6%?

(b) What is the present value of this 4-year ordinary annuity?

(c) What would the i) future, and ii) present value, be if this annuity were an annuity due (still 4 years)? Hint: set your calculator to BGN, there is a video in M2 that shows you how . Don't forget to reset to "END" after you work an annuity due problem.

FV =

PV =

Compare the results you got in part b for present and future value of a "regular" annuity and compare these to the values you got for the annuity due (part c). What is the relationship that you see? Using the time value of money concepts you have learned so far, why does this relationship (PV of regular annuity vs. annuity due and FV of regular annuity vs. annuity due occur?