Rose Carter wants to determine how much she must deposit today at 14% interest to provide four withdrawals of $6, 000 at the end of each year, beginning five years from now.This is an example of the present value of a(n)
A)ordinary annuity
B)annuity due
C)single sum
D)deferred ordinary annuity

Question

Quizplus · Accepted Answer

This is an example of a deferred ordinary annuity because the withdrawals start at a future date (five years from now) and occur at the end of each period, which is characteristic of an ordinary annuity. The deferment period before the annuity payments begin distinguishes it from a standard ordinary annuity.

Rose Carter Wants to Determine How Much She Must Deposit