An annuity consists of payments of $600 at the beginning of each month with an annual rate of 5.7 per cent. Is this an ordinary annuity or an annuity due?
A) ordinary annuity
B) annuity due

Question

An annuity consists of payments of $600 at the beginning of each month with an annual rate of 5.7 per cent. Is this an ordinary annuity or an annuity due? ​
A) ordinary annuity
B) annuity due

Quizplus · Accepted Answer

An annuity due involves payments made at the beginning of each period, while an ordinary annuity involves payments made at the end of each period. Since the payments in this scenario are being made at the beginning of each month, it is an annuity due. Therefore, the best choice is B.

An Annuity Consists of Payments of $600 at the Beginning