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Questions and Answers
What is an annuity due?
What is an annuity due?
- A payment made irregularly
- A payment made at the end of each period
- A payment made at the beginning of each period (correct)
- A single lump sum payment
An annuity due is less valuable than an ordinary annuity if the interest rate is positive.
An annuity due is less valuable than an ordinary annuity if the interest rate is positive.
False (B)
What formula is used to calculate the present value of an annuity due?
What formula is used to calculate the present value of an annuity due?
PV = PMT × [(1 - (1 + r)^-n) / r] × (1 + r)
The future value of an annuity due can be calculated using the formula: FV = PMT × [((1 + r)^n - 1) / r] × (1 + r). In this case, PMT stands for the ______ .
The future value of an annuity due can be calculated using the formula: FV = PMT × [((1 + r)^n - 1) / r] × (1 + r). In this case, PMT stands for the ______ .
Match the following terms related to annuity due with their correct descriptions:
Match the following terms related to annuity due with their correct descriptions:
Flashcards
Annuity Due
Annuity Due
An annuity where payments are made at the beginning of each period.
Payment Timing
Payment Timing
Payments are made at the beginning of each period for an annuity due.
Annuity Calculation
Annuity Calculation
Formula used to determine the future value or present value of an annuity due.
Financial Applications
Financial Applications
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Ordinary Annuity
Ordinary Annuity
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