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Consider the following cases. Case Amount of annuity Interest rate Period (years) Your answers here Ordinary Due A $12,000 7% 3 B 22,500 10 5
Consider the following cases.
| Case | Amount of annuity | Interest rate | Period (years) | Your answers here | |
| Ordinary | Due | ||||
| A | $12,000 | 7% | 3 |
|
|
| B | 22,500 | 10 | 5 |
|
|
- a)Calculate the present value of the annuity that it is
- i)An ordinary annuity (annuity immediate)
- ii)An annuity due
- b)Compare your findings in parts a(1) and a(2). All else being identical, which type of annuity, ordinary or annuity due, is preferred? Explain why.
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Intermediate Accounting IFRS
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
3rd edition
1119372933, 978-1119372936
