The future value of an annuity will be larger if
1. the annuity is an ordinary annuity
2. the annuity is an annuity due
3. the payments are made at the beginning of the year
4. the payments are made at the end of the year
A) 1 and 3
B) 1 and 4
C) 2 and 3
D) 2 and 4

Question

Quizplus · Accepted Answer

An annuity due has payments at the beginning of each period, allowing each payment to earn interest for an additional period compared to an ordinary annuity, resulting in a larger future value.

The Future Value of an Annuity Will Be Larger If