When comparing annuity due to ordinary annuities, annuity due annuities will have higher
A) present values.
B) annuity payments.
C) future values.
D) both A and C.
E) all of the above.

Question

Quizplus · Accepted Answer

Annuity due annuities have higher present values because payments are made at the beginning of each period, which means they benefit from one additional period of compounding compared to ordinary annuities. They also have higher future values because the first payment is compounding for one additional period compared to ordinary annuities. However, annuity due annuities do not have higher annuity payments compared to ordinary annuities.

When Comparing Annuity Due to Ordinary Annuities, Annuity Due Annuities