Why does an annuity due always have a higher future value than an
ordinary annuity? If you calculated the value of an ordinary annuity, how could you
find the value of the corresponding annuity due?
Assume that you plan to buy a condo five years from now, and you
need to save for a down payment. You plan to save $2,500 per year,
with the first payment made immediately, and you will deposit the
funds in a bank account that pays 4 percent. How much will you
have after five years?
How much would you have if you made the
deposits at the end of each year?
