Question: Amount of annuity Interest rate Period (years) $12,000 7% 3 a. Calculate the present value of the annuity assuming that it is(1) An ordinary annuity.(2)

Amount of annuity

Interest rate

Period (years)

$12,000

7%

3

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

annuityordinary

or annuity

dueis

preferable? Explain why.

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