You are considering two investments (ORD and DUE) that each pay $5000 each year for the next 10 years. Investment ORD makes each payment at the end of the year, and Investment DUE makes payments at the beginning of each year. Which of the following statements is correct?
A) The present value of ORD must exceed the present value of DUE, but the future value of ORD may be less than the future value of DUE.
B) The present value of DUE exceeds the present value of ORD, while the future value of DUE is less than the future value of ORD.
C) The present value of ORD exceeds the present value of DUE, and the future value of ORD also exceeds the future value of DUE.
D) The present value of DUE exceeds the present value of ORD, and the future value of DUE also exceeds the future value of ORD.
Correct Answer:
Verified
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