Lori Miller deposits $2, 000 each year into a savings account beginning January 1, 2010.The last payment will be made on January 1, 2019, after which the total amount will be withdrawn to purchase a yacht.To find the amount available on January 1, 2014, after the last payment, Lori must determine
A)the present value of an ordinary annuity
B)the present value of a single sum
C)the future value of an ordinary annuity
D)the future value of a single sum

Question

Quizplus · Accepted Answer

Since Lori is making regular deposits into the savings account for multiple years and withdrawing the total amount at a future date, we need to find the future value of an ordinary annuity, which is the total value of all the deposits plus the interest earned over the years. Option C is the only choice that refers to the future value of an ordinary annuity, which makes it the best choice.

Lori Miller Deposits $2, 000 Each Year into a Savings