An n uity Du e . Recall that an annuity due is like an ordinary annuity except that the first pay-

An n uity Du e . Recall that an annuity due is like an ordinary annuity except that the first pay- ment is made immediately instead of at the end of the first period.

a. Why is the present value of an annuity due equal to (1 + r ) times the present value of an ordinary annuity?

b. Why is the future value of an annuity due equal to (1 + r ) times the future value of an or- dinary annuity?

 

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