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Math Help - Annuity

  1. #1
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    Annuity

    Which annuity has the greater amount at the end of 5 years?Why does this happen?

    Annuity A:$100 at the end of each month for 5 years at 6%a compounded monthly.

    Annuity B:$1200 at the end of each year for 5 years at 6%a compounded annually.



    2.When you double the time of an annuity,do you double the amount at maturity?
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  2. #2
    MHF Contributor
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    Annuity A vs Annuity B

    $100 of A has been collecting interest for 11 months before that $1200 of B even shows up.

    2. I sincerely hope not, unless it's linear. If there is ANY compounding going on, then life is better.
    Last edited by TKHunny; June 9th 2010 at 07:36 PM.
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