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The annuity transformation method is used to transform:

A) a present value annuity to a future value annuity.
B) a present value annuity to an annuity due.
C) an ordinary annuity to an annuity due.
D) a perpetuity to an annuity.

1 Answer

2 votes

Final answer:

The annuity transformation method is used to convert a present value annuity to an annuity due.

Step-by-step explanation:

The annuity transformation method is used to transform:

  • A) a present value annuity to a future value annuity.
  • B) a present value annuity to an annuity due.
  • C) an ordinary annuity to an annuity due.
  • D) a perpetuity to an annuity.

The correct answer is option B. The annuity transformation method is used to convert a present value annuity to an annuity due. An annuity due is a type of annuity where the payments are received or made at the beginning of each period, rather than at the end.

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User Sergey Nudnov
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