You are comparing two annuities. Annuity A pays $100 at the end of each month for 10 years. Annuity B pays $100 at the beginning of each month for 10 years. The rate of return on both annuities is 8 percent. Which one of the following statements is correct given this information?
a. the present value of annuity A is equal to the present value of annuity b
b. annuity b will pay one more payment than annuity a will
c. the future value of annuity a is greater than the future value of annuity b
d. annuity b has both a higher present value and a higher future value than annuity A
e. Annuity a has a higher future value but a lower present value than annuity b
Ans: d. annuity b has both a higher present value and a higher future value than annuity A
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