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An ordinary annuity assumes equal payments at the end of each period over the life of the annuity. An annuity due is the same thing
An ordinary annuity assumes equal payments at the end of each period over the life of the annuity. An annuity due is the same thing except the payments occur at the beginning of each period instead. Thus, a three-year annual annuity due would have periodic payment cash flows occurring at years 0, 1, and 2, whereas a three-year annual ordinary annuity would have periodic payment cash flows occurring at years 1, 2 and 3. a. At a 9.5% annual discount rate, find the present value of an eight-year ordinary annuity contract of $950 payments. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Present value $ b. Find the present value of the same contract if it is an annuity due. (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Present value $
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