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Suppose you are evaluating two annuities. They are identical in every way, except that one is an ordinary annuity, and one is an annuity due.
Suppose you are evaluating two annuities. They are identical in every way, except that one is an ordinary annuity, and one is an annuity due. Assuming
an interest rate of which of the following is true?
Multiple Choice
The two annuities will differ in present value by the amount of exactly one of the annuity payments.
The ordinary annuity must have a higher present value than the annuity due.
The regular annuity must have a lower future value than the annuity due.
The annuity due will be larger than the regular annuity by an amount equal to the present value of the last annuity payment.
The annuity due must have the same present value as the ordinary annuity
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