Which one of the following statements concerning an ordinary annuity is true?
A) An ordinary annuity consists of equal payments that occur at the beginning of each period over a set period of time.
B) If two annuities are equal in every way except that one is an ordinary annuity and one is an annuity due, then the ordinary annuity will have a larger future value than the annuity due.
C) The future value of an ordinary annuity can be computed by dividing the future value of an annuity due by (1 + r) .
D) If two annuities are equal in every way except that one is an ordinary annuity and one is an annuity due, then the ordinary annuity will have a larger present value than the annuity due.
E) Most financial calculators can compute ordinary annuity problems but not annuity due problems.
Correct Answer:
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