Future value of an annuity. Using the values below, answer the questions that follow. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)
Amount of annuity= $8,500 Interest rate= 7% Deposit period (years)= 7
a. Calculate the future value of the annuity, assuming that it is:
(1) An ordinary annuity.
(2) An annuity due.
b. Compare your findings in parts a (1) and a (2). All else being identical, which type of annuity -ordinary or annuity due- is preferable as an investment? Explain why.