Properties of an ordinary annuity in engineering economy: which characteristics correctly describe such an annuity used in financial calculations?

Introduction / Context:
Annuities are ubiquitous in loan amortization, lease rentals, sinking funds, and capital recovery calculations. The most common type in engineering economy is the ordinary annuity, in which equal payments occur at the end of each period. Understanding these defining features ensures correct use of P/A, A/P, F/A, and A/F factors.

Given Data / Assumptions:

• Discrete periods (monthly, quarterly, yearly, etc.).
• Constant payment amount each period.
• Timing convention: end-of-period unless stated otherwise (annuity due would be at the beginning).

Concept / Approach:
With an ordinary annuity, compounding between payments is straightforward and standard factor tables apply. If payments occur at the beginning of each period, use the “annuity due” adjustment (multiply by (1 + i) where appropriate). Clarity about timing avoids misvaluation of present worth or future worth.

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