Ordinary Annuities and Annuities Due As discussed in the text, an annuity due is identical to an
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Ordinary Annuities and Annuities Due As discussed in the text, ‘an annuity due is identical to an ordinary annuity except that the periodic payments occur at the beginning of each period and not at the end of the period. Snow that the relationship between the value ‘of an ordinary annuity and the value of an otherwise equivalent annuity due is:
Annuity due value = Ordinary annuity value × (1 + r)
Show this for both present and future values.
AnnuityAn annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th Edition
Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan
Question Posted:
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