When equal payments are made at the end of each period for a certain time p ordi

Question

When equal payments are made at the end of each period for a certain time p ordinary annuities. An ordinary annuity of equal time earns less interest than an annuity due. X When equal payments are made at the end of each period for a certain time pe annuity due. Which of the following is an example of an annuity? O A lump-sum payment made to a life insurance company that promises to make later for some period of time O An investment in a certificate of deposit (CD) Luana loves shopping for clothes, but considering the state of the economy, she has de end of each year, she will deposit $500 in her local bank, which pays her 496 annual int will continue to do this for the next six years. Luana's savings are an example of an ann by the end of six years? O $3,449.15

Explanation / Answer

A lumpsum payment made to an insurance company is an example of annuity.

This is termed as immediate annuity.

An immediate annuity is a contract between an insurance company and an individual. The individual pays a single lumpsum amount in exchange for a promise by the insurance company to make payments to the individual(annuitant) for the remainder of his life or for a fixed period of time.

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