Question

Is this statement true or false? If one set up time lines for an ordinary annuity of $1,000 per year for 3 years and a 3-year, $1,000 annuity due, the primary difference between the two time lines is that the $1,000 payments for the annuity due would begin at t = 0 and end at t = 2, whereas the ordinary annuity's payments would begin at t = 1 and end at t = 3.

Answer 1

This Statement is TRUE.

Reason:

Payments are made at the starting of each period in an Annuity due ( begin at t = 0 and end at t = 2 ) in above case.

Payments are made at end of each period in Ordinary annuity ( begin at t = 1 and end at t = 3 ) in above case