Case Amount of annuity Interest rate Period (years) 7% 3 ABCDE 22,500 $12,000 55,000 700 140,000...

 

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Case Amount of annuity Interest rate Period (years) 7% 3 ABCDE 22,500 $12,000 55,000 700 140,000 12 2250 15 7 10 915 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. Case Amount of annuity Interest rate Period (years) 7% 3 ABCDE 22,500 $12,000 55,000 700 140,000 12 2250 15 7 10 915 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.

Answer rating: 100% (QA)

To calculate the present value of the annuity we can use the formula for the present value of an ord... View the full answer