Loan A has the same original principal,interest rate,and payment amount as Loan B.However,Loan A is structured as an annuity due,while Loan B is structured as an ordinary annuity.The maturity date of Loan A will be:
A)Earlier than Loan B.
B)Later than Loan B.
C)The same as Loan B.
D)Indeterminate with respect to loan B.

Question

Quizplus · Accepted Answer

An annuity due requires payments at the beginning of each period, while an ordinary annuity requires payments at the end of each period. Since Loan A has payments made at the beginning of each period, it will accumulate interest faster and therefore mature earlier than Loan B.

Loan a Has the Same Original Principal,interest Rate,and Payment Amount