BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -An annuity due is an annuity in which the cash flows, or payments, occur at the beginning of the period. An annuity due is also called an annuity in arrears. The cash flows occur at the beginning of years 1 through 5.

Detailed explanation-2: -Annuity due is an annuity whose payment is due immediately at the beginning of each period. Annuity due can be contrasted with an ordinary annuity where payments are made at the end of each period. A common example of an annuity due payment is rent paid at the beginning of each month.

Detailed explanation-3: -An ordinary annuity is a series of equal payments made at the end of consecutive periods over a fixed length of time. While the payments in an ordinary annuity can be made as frequently as every week, in practice they are generally made monthly, quarterly, semi-annually, or annually.

Detailed explanation-4: -If the periodic payments are made at the end of each period, the annuity is called an immediate annuity or ordinary annuity.

Detailed explanation-5: -With an ordinary annuity, a payment is made or received on the date the agreement begins. In the future value of an ordinary annuity, the last cash payment will not earn any interest. An annuity consists of level principal payments plus interest on the unpaid balance.