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Hi I am doing an intro to finance the the present value and future values are...

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Finance

Hi I am doing an intro to finance the the present value andfuture values are a little bit confusing so my question is:

How is the difference between an ordinary annuity and an annuitydue affect the Present Value and Future Value of two otherwiseidentical annuities?

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3.6 Ratings (414 Votes)
Present value Annuity is a series of fixed cash flow for a certain number of periods An ordinary annuity states that cash flow is paid at the END of each year An annuity due states that cash flow if paid st the BEGINNING at the each year The present value of annuity due will always be greater than present value of ordinary annuity This is because annuity due has a period less to discount    See Answer
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Hi I am doing an intro to finance the the present value andfuture values are a little bit confusing so my question is:How is the difference between an ordinary annuity and an annuitydue affect the Present Value and Future Value of two otherwiseidentical annuities?

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