Given a positive interest rate and a positive cash flow,an ordinary annuity always has a greater future value than an annuity due of the same size and number of cash flows.

Question

Quizplus · Accepted Answer

An annuity due has a cash flow at the beginning of each period, which means that each cash flow earns interest for one additional period than in an ordinary annuity. This compounding effect results in a greater future value for an annuity due compared to an ordinary annuity of the same size and number of cash flows.

Given a Positive Interest Rate and a Positive Cash Flow,an