Present value of an annuity Consider the following case. $($Click on the icon here in order to copy the contents of the data table below into a spreadsheet.$)$

$\backslash$table$[[$Amount of annuity,Interest rate,Period $($years$)],[$$$15,000,8\%,5]]$

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.

The present value of the ordinary annuity is $

$($Round to the nearest cent.$)$

The present 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? $($Select the best answer below.$)$

Annuity due, because all else being identical, it will yield a higher present value.

Ordinary annuity, because all else being identical, it will yield a higher present value.