Present value of an annuity Consider the following cases. a. Calculate the present value of the annuity

Question:

Present value of an annuity Consider the following cases.

a. Calculate the present value of the annuity assuming that it is
(1) An ordinary annuity.
(2) An annuity due.
b. Compare your findings in parts a(1) and a(2). All else being identical, which type of annuity - ordinary or annuity due - is preferable? Explain why.

Annuity
An 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,...