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Consider an ordinary annuity that pays out over 5 as well as an annuity due that also pays out over 5 periods. Assume that each

Consider an ordinary annuity that pays out over

5

as well as an annuity due that also pays out over

5

periods. Assume that each of these

annuities has the same interest rate.

The annuity due will have

the ordinary annuity, because the annuity due has

periods of

earning interest when compared to the ordinary anntity.

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