Asked 7/17/2009
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What gains more interest an ordinary annuity or an annuity due? |
Answer 1/1 - Submitted 4/8/2012
I assume by ordinary annuity you mean one that pays in arrears. An annuity due pays in advance. As this means you are paid the money sooner there is less time for interest to accrue. Therefore an annuity due (paid in advance) will be more expensive to purchase than an annuity paid in arrears, in other words it has a higher net present value.
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