FIN$3220-10087\mathrm{.}202510/$ Midterm $/$ Midterm Exam

dterm Exam

You are comparing two annuities which offer monthly payments of $$500$ for ten years and pay $1$ percent interest per month. Annuity A will pay you on the first of each month while annuity B will pay you on the last day of each month. Which one of the following statements is correct concerning these two annuities?

Select one:

a$.$ Annuity $B$ is an annuity due.

b$.$ Annuity $B$ has a smaller present value than annuity $A.$

c$.$ These two annuities have equal present values but unequal futures values at the end of year five.

d$.$ These two annuities have equal present values as of today and equal future values at the end of year five.

e$.$ Annuity A has a smaller future value than annuity $B.$

lidterm Review Exercise

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