Problem: Future Value of annuity. For each case in the accompanying table, answer the question that follow.
Amount of Interest Deposit period
Case annuity rate (years)
A $ 2,500 8% 10
B 500 12 6
C 30,000 20 5
D 11,500 9 8
E 6,000 14 30
a. Calculate the future value of the annuity assuming that it is
(1) An ordinary annuity.
(2) An annuity due.
b. Compare your finding in parts a (1) and a (2). All else being identical, which type of annuity – ordinary or annuity due – is preferable? Explain why?