What Is The Difference Between Ordinary Annuities And Annuities Due

1. What is the difference between ordinary annuities and annuities due The key difference betweenordinary annuities and annuities due is the payment period. With an ordinary annuity each payment of belongs to the payment period preceding its date, while in the case of an annuity-due each payment is for a period following its date. Therefore, payment for annuity due is made at the beginning and the payment for ordinary annuity is paid at the end of the period. Since payments for annuity due are made sooner than those for an ordinary annuity, payments for annuity due typically have a higher net present value (The Motley Fool, 2018). References The Motley Fool. (2018). What Is the Difference Between an Annuity Due vs. an Ordinary Annuity Retrieved May 10, 2018 2. Explain how to use Excelto evaluate annuities. The basic annuity formula in Excel is given by the argument PV (RATE, NPER, PMT). Where RATE is the discount rate or interest rate, NPER is the number of periods with that discount rate, and PMT is the amount of each payment. For example when evaluating the present value of a future annuity with an interest rate of 5 percent for 12 years and