What are the primary characteristics of an annuity? Differentiate between an "ordinary annuity" and an "annuity due."
An annuity involves (1) periodic payments or receipts, called rents, (2) of the same amount, (3) spread over equal intervals, (4) with interest compounded once each interval.
Rents occur at the end of the intervals for ordinary annuities while the rents occur at the beginning of each of the intervals for annuities due.
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