For any discount rate and number of periods,the present value of an annuity due factor is always greater than the corresponding the present value of an ordinary annuity factor.

Question

Quizplus · Accepted Answer

This is because in an annuity due, payments are made at the beginning of each period, while in an ordinary annuity, payments are made at the end of each period. As a result, the annuity due payments have an extra period to accrue interest, leading to a higher present value.

For Any Discount Rate and Number of Periods,the Present Value