Calculate the present value of the annuity assuming that it is (1) an ordinary annuity (2)...

Calculate the present value of the annuity assuming that it is (1) an ordinary annuity (2) an annuity due. Comparing the two types of annuities, all else equal, which type is more preferable? Why? Amount of annuity=$12,000 Interest rate=7% Deposit period (years)=3

Ordinary annuity = 33696, annuity due = 31492, ordinary annuity is better because it discounts for one less year.

Ordinary annuity = 31492, annuity due = 33696, annuity due is better because it discounts for one less year.

Ordinary annuity = 33696, annuity due = 31492, ordinary annuity is better because it compounds for one more year.

Ordinary annuity = 31492, annuity due = 33696, annuity due is better because it compounds for one more year.

Expert Solution

jeff jeffy answered 4 months ago

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