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P5-20 Present valuc of an annuity Consider the following cases. Case Interest rate 7% 12 20 Annuity payment Annuity length (ycars) 12,000 55,000 700 140,000
P5-20 Present valuc of an annuity Consider the following cases. Case Interest rate 7% 12 20 Annuity payment Annuity length (ycars) 12,000 55,000 700 140,000 22,500 15 7 10 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 typoe of annuity-ordinary or annuity duc-is preferable? Explain why
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