Question

(1) The future value of the ordinary annuity is ​$22713.1822713.18. ​(Round to the nearest​ cent.) ​(2) The future value of the annuity due is ​$25211.6325211.63. ​(Round to the nearest​ cent.) b. Compare your findings in parts a​(1) and a​(2). All else being​ identical, which type of annuity is preferable as an​ investment? ​(Select the best answer​ below.) Ordinary​ annuity, because it yields a greater future value. Annuity​ due, because it yields a greater future value.

Answer 1

Answer:

Annuity​ due, because it yields a greater future value.

Explanation:

Given that the future value of the ordinary annuity is ​$22713.1822713.18

Rounded off to the nearest cent we get

22713.18 $ from ordinary equity

The future value of the annuity due is ​$25211.6325211.63.

Rounded off to the nearest cent we get

25211.63 $

Assuming all else are identical , we prefer to select the one which gives more future annuity.

On comparison we find that annuity gives more future value.

So answer is

Annuity​ due, because it yields a greater future value.