Calculating Annuities Due Suppose you are going to receive $8,000 per year for 10 years. The appropriate interest rate is 9 percent.
a. What is the present value of the payments if they are in the form of an ordinary annuity? What is the present value if the payments are an annuity due?
b. Suppose you plan to invest the payments for 10 years. What is the future value if the payments are an ordinary annuity? What if the payments are an annuity due?
c. Which has the highest present value, the ordinary annuity or the annuity due? Which has the highest future value? Will this always be true?