If two annuities have the same number of rents with the same dollar amount, but one is an annuity due and one is an ordinary annuity, the future value of the annuity due will be greater than the future value of the ordinary annuity.

Question

Quizplus · Accepted Answer

Since each payment in an annuity due is received one period earlier than in an ordinary annuity, there will be one more compounding period in which to earn interest. This extra period of compounding will result in a higher future value for the annuity due.

If Two Annuities Have the Same Number of Rents with the Same