The Difference Between an Ordinary Annuity and an Annuity Due

question 136

Multiple Choice

The difference between an ordinary annuity and an annuity due is:

• A) an ordinary annuity represents a present value and an annuity due represents a future value.
• B) an ordinary annuity represents a future value and an annuity due represents a present value.
• C) an ordinary annuity assumes the cash flows occur at the beginning of the period and an annuity due assumes the cash flows occur at the end of the period.
• D) an ordinary annuity assumes the cash flows occur at the end of the period and an annuity due assumes the cash flows occur at the beginning of the period.

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