Ordinary Annuity or Annuity Due ?

CFA Level I Quant
#1

Q. Suppose your company’s defined contribution retirement plan allows you to invest up to €20,000 per year. You plan to invest €20,000 per year in a stock index fund for the next 30 years. Historically, this fund has earned 9 percent per year on average. Assuming that you actually earn 9 percent a year, how much money will you have available for retirement after making the last payment?

This Question is in the CFA Quantitaive Book and is solved a Ordinary Annuity.

I am not surenwhy it is Ordinary Annuity . It could also be Annuity Duew , with payments stating at t=0 (At the begining of each year ) and by virtue the value of the investment will be different from Ordinary Annuity.

Please let me know whta’s wrong with my reasoning.

Thanks!

#2

if it’s not stated explicitly in the question that payments are to me made or received at the beginning of eah period, it’s usually not safe to assume it. The question itself sounds very clear to me, if Mr A is investing 30 dollars in his retirement account, then it should be treated as a normal annuity. If however, Mr A is investing 30 dollars at the beginning of every period starting from today, then than can be treated as an Annuity due.

#3

Thanks Bloodline ! That helps .