Question

Which of the following is true?

a.Rents occur at either the beginning or the end of an annuity due.
b.Rents occur at the end of each period of an annuity due.
c.Rents occur at the beginning of each period of an annuity due.
d.Rents occur at the beginning of each period of an ordinary annuity.

Answer 1

c.Rents occur at the beginning of each period of an annuity due.

Step-by-step explanation:

First, know the difference between Ordinary annuity and Annuity due.

In Ordinary annuity, recurring payments occur at the end of the payment period; for example at the end of every month, end of ever year , end of every quarter etc.

On the other hand, in the case of Annuity due, the recurring payments occur at the beginning of the period like at the beginning of the month, beginning of the year;Jan 1st, or beginning of every quarter

In the case of rent, tenants pay rent at the beginning of each month making this type of payment an Annuity Due.