Which statement is false?
A) The factor for the future value of an annuity due is found by multiplying the ordinary annuity table value by one plus the interest rate.
B) The factor for the present value of an annuity due is found by multiplying the ordinary annuity table value by one minus the interest rate.
C) The factor for the future value of an annuity due is found by subtracting 1.00000 from the ordinary annuity table value for one more period.
D) The factor for the present value of an annuity due is found by adding 1.00000 to the ordinary annuity table value for one less period.

Question

Quizplus · Accepted Answer

The factor for the present value of an annuity due is actually found by multiplying the ordinary annuity table value by one plus the interest rate, not one minus the interest rate. This adjustment accounts for the fact that each payment in an annuity due is made at the beginning of the period.

Which Statement Is False