For any discount rate,the future value of an ordinary annuity factor for n periods is equal to the future value of an annuity due factor for n - 1 periods plus 1.

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Quizplus · Accepted Answer

This statement is true. The formula for the future value of an ordinary annuity is FV = PMT x [(1 + r)^n - 1]/r, where PMT is the periodic payment, r is the discount rate, and n is the number of periods. The future value of an annuity due is one period more than the ordinary annuity, so the formula becomes FV = PMT x [(1 + r)^n - 1]/r x (1 + r). Therefore, the future value of an ordinary annuity factor for n periods is equal to the future value of an annuity due factor for n - 1 periods plus 1.

For Any Discount Rate,the Future Value of an Ordinary Annuity