Future value of an annuity Using the values below, answer the questions that follow.

Amount of Annuity - $6,000

Interest Rate - 9%

Deposit Period (years) - 6

a. Calculate the future 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 as an investment? Explain why.

*ANSWER*

a.(1) The future value of the ordinary annuity is $_____? (Round to the nearest cent).

(2) The future value of the annuity due is $_____? (Round to the nearest cent).

b. Compare your findings in parts a(1) and a(2). All else being identical, which type of annuity is preferable as aninvestment?

--> Ordinary annuity, because it yields a greater future value OR

--> Annuity due, because it yields a greater future value