An Annuity and an Annuity Due with the Same Number

question 61

Multiple Choice

An annuity and an annuity due with the same number of payments have the same future value if r = 10%. Which one has the higher payment?

• A)They both must have the same payment since the future values are the same.
• B)There is no way to tell which has the higher payment.
• C)An annuity and an annuity due cannot have the same future value.
• D)The annuity has the higher payment.
• E)The annuity due has the higher payment.

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Definitions:

Net Income

The total earnings of a company after all expenses and taxes have been deducted from revenues, indicating the company's profit.

Selling Price

The amount of money charged to the customer for a product or service.

Variable Manufacturing Costs

These are costs that vary directly with the level of production output, including expenses like raw materials and variable labor costs.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production output and include expenses such as rent, property taxes, and salaries for permanent staff.