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 present value of the annuity due will be greater than the present value of the ordinary annuity.

Question

Quizplus · Accepted Answer

The present value of an annuity due will always be greater than the present value of an ordinary annuity with the same number of rents and the same dollar amount because payments are received at the beginning of each rent period, which allows for more time for the interest to compound.

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