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Present value of an annuity Consider the following case.(Click on the icon located on the top-right corner of the data table below in order to

Present value of an annuityConsider the following case.(Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)

Amount of annuity

Interest rate

Period (years)

$14 comma 00014,000

5%

8

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 type of

annuitylong dashordinary

or annuity

duelong dashyields

a higher present value? Explain why.

The present value of the ordinary annuity is

$nothing.

(Round to the nearest cent.)

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