Q.Classify each of the following as an annuity immediate (ordinary annuity) or an annuity due, giving a reason:

Check whether each payment falls at the end or the beginning of its period — end-of-period payments are an ordinary annuity, beginning-of-period payments are an annuity due.

Step 1 — Recall the defining distinction. An annuity immediate (ordinary annuity) pays at the end of every period; an annuity due pays at the beginning of every period — the entire classification rests on this single timing fact, not on the amount, the interest rate, or the number of instalments.

Step 2 — Classify (i). A loan EMI paid on the last day of every month is paid at the end of that month's period — this is an annuity immediate.

Step 3 — Classify (ii). A rent of ₹8,000 paid on the 1st day of every month is paid at the very start of that month's period — this is an annuity due. …

Assuming the classification depends on what the annuity is for (a loan versus a rent) rather than purely on when within each period the payment falls is the central misconception this question is designed to correct — the same loan could just as easily be structured with due-date payme …