Which of the annuity contracts has the higher present value

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Question: Compare two annuity contracts. Annuity Contract A pays its holder $15,000 per year for 10 years, at the end of each year, beginning 1 year from today. Annuity B pays its holder $12,500 per year for 12 years, at the beginning of each year, beginning today. The relevant rate of discount for both contracts is 6.5 percent. Which of the annuity contracts has the higher present value. How much higher?

Reference no: EM131959838

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