Assume that $100 is deposited at the end of each year for five years at 10% compound interest and that no withdrawals are made over the five- year period. Based on this data, which one of the following statements is correct?
A) The present value can be determined by computing the present value of $500 in five years at 10%.
B) The future value will be $550.
C) The present value can be determined by computing the present value of a $100 ordinary annuity for five years at 10%.
D) The present value will be $500.

Question

Quizplus · Accepted Answer

The present value of an ordinary annuity can be determined by computing the present value of each $100 payment made at the end of each year for five years at 10%.

Assume That $100 Is Deposited at the End of Each