Given identical data,the future value of an ordinary annuity is greater than the future value of an annuity due.

Question

Quizplus · Accepted Answer

The future value of an ordinary annuity and the future value of an annuity due will be the same if the time period, interest rate, and payment amount are identical. However, since payments for an annuity due are made at the beginning of each period, the interest will start accruing for an additional period, resulting in a higher present value but this does not affect the future value. Thus, the future value of an ordinary annuity is not necessarily greater than the future value of an annuity due.

Given Identical Data,the Future Value of an Ordinary Annuity Is