Raymond Bartz is trying to choose between two equally risky annuities, each paying $5,000 per year for five years One is an ordinary annuity, the other is an annuity due Which of the following statements is most correct a The present value of the ordinary annuity must exceed the present value of th...

c The present value of the annuity d ...

Raymond Bartz is trying to choose between two equally risky annuities, each paying $5,000 per year for

Question:

Raymond Bartz is trying to choose between two equally risky annuities, each paying $5,000 per year for five years. One is an ordinary the other is an due. Which of the following statements is most correct?
a. The present value of the ordinary must exceed the present value of the due, but the of an ordinary may be less than the of the due.
b. The present value of the due exceeds the present value of the ordinary while the of the due is less than the of the ordinary The present value of the due exceeds the present value of the ordinary and the of the due also exceeds the of the ordinary If interest rates increase, the difference between the present value of the ordinary and the present value of the due remains the same.

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,... Future Value
Future value (FV) is the value of a current asset at a future date based on an assumed rate of growth. The future value (FV) is important to investors and financial planners as they use it to estimate how much an investment made today will be worth...