The Future Value of the Annuity Due Exceeds the Future

question 56

True/False

The future value of the annuity due exceeds the future value of the ordinary annuity, but the present value of the annuity due is less than the present value of the ordinary annuity.

---

Definitions:

Principle Amount

The principal amount is the initial size of a loan or an investment, not including profits or interest.

Loan Payment

A payment made by a borrower to a lender that may include both the principal and interest.

Effective Annual Rate

The interest rate on a loan or financial product restated from the nominal rate as an annual rate, including any compounding that occurs during the year.

APR

Annual Percentage Rate, a measure that reflects the annualized cost of borrowing including interest and other fees, making it easier to compare different financial products.