Present value of an annuity Co

Present value of an annuity Consider the following case:


Amount of annuity Period (years) =
$40,000

Interest rate= 9%
period(years) = 3
– Calculate the present value of the annuity assuming that it is
(1) An ordinary annuity
(2) An annuity due
– Compare your findings in parts (1) and a(2). All else being identical, which type of annuity-ordinary or annuity due preteratio? Explain why
-The present value of the ordinary annually is $
-The present value of the annuity due is $
Compare your findings in parts (a)1 and (a) all else being identical, which type of annuity is preferable? (Select the best answer below)
O Ordinary annuity, because all else being identical, it will yield a higher present value
O Annuity due, because all else being identical, will yield a higher prosent value

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