To calculate the present value of an annuity due you would take the present value of an ordinary annuity answer and whereas to calculate the future value of an annuity due you would take the future value of an ordinary annuity answer and .
A) divide by (1 + i); multiply by (1 + i)
B) multiply by (1 + i); multiply by (1 + i)
C) multiply by (1 + i); divide by (1 + i)
D) multiply by i; divide by i

Question

To calculate the present value of an annuity due you would take the present value of an ordinary annuity answer and 	whereas to calculate the future value of an annuity due you would take the future value of an ordinary annuity answer and 	.
A) divide by (1 + i); multiply by (1 + i)
B) multiply by (1 + i); multiply by (1 + i)
C) multiply by (1 + i); divide by (1 + i)
D) multiply by i; divide by i

Quizplus · Accepted Answer

To calculate the present value of an annuity due, you multiply the present value of an ordinary annuity by (1 + i) because payments are made at the beginning of each period, thus they have one extra period to discount. Similarly, to calculate the future value of an annuity due, you also multiply the future value of an ordinary annuity by (1 + i) because each payment is invested for one additional period compared to an ordinary annuity.

To Calculate the Present Value of an Annuity Due You