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P5-22 Present value of an annuityConsider the following cases. CaseAnnuity paymentInterest rateAnnuity length (years) A $12,000 7% 3 B 55,000 12 15 C 700 20

P5-22 Present value of an annuityConsider the following cases.

CaseAnnuity paymentInterest rateAnnuity length (years) A $12,000 7% 3 B 55,000 12 15 C 700 20 9 D 140,000 5 7 E 22,500 10 5

Calculate the present value of the annuity, assuming that it is

An ordinary annuity.

An annuity due.

Compare your findings in parts a(1) and a(2). All else being identical, which type of annuityordinary or annuity dueis preferable? Explain why.

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