Question: 4. Using the values below, answer the questions that follow: Amount of annuity Interest rate Deposit period (years) $500 9% 10 a) Calculate the future

4. Using the values below, answer the questions that follow:

Amount of annuity Interest rate Deposit period (years)

$500

a) Calculate the future value of the annuity, assuming that it is

(1) An ordinary annuity. (0.5 marks)

(2) An annuity due. (0.5 marks)

b) Compare your findings in parts a(1) and a(2). All else being identical, which type of annuityordinary or annuity dueis preferable as an investment? Explain why. (0.5 Marks)

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