An annuity due and an ordinary annuity have equal payments, the same interest rates, and the amount of time between the payments is equal. Which statement is true?
A) The present value of the annuity due is less than the present value of the ordinary annuity.
B) The future value of the annuity due is less than the future value of the ordinary annuity.
C) The future value of the annuity due is equal to the future value of the ordinary annuity.
D) The present value of the annuity due is greater than the present value of the ordinary annuity.

Question

Quizplus · Accepted Answer

An annuity due has payments at the beginning of each period, leading to more time for each payment to earn interest, resulting in a greater present value compared to an ordinary annuity.

An Annuity Due and an Ordinary Annuity Have Equal Payments