Stephen Michaels wants to know how much he must deposit today at 12% interest to provide three equal annual withdrawals of $10,000, beginning one year from now. This is an example of the present value of
A) an ordinary annuity.
B) an annuity due.
C) a single sum.
D) a deferred annuity.

Question

Quizplus · Accepted Answer

The scenario describes an ordinary annuity, where payments are made at the end of each period. Since the withdrawals start one year from now, it aligns with the definition of an ordinary annuity.

Stephen Michaels Wants to Know How Much He Must Deposit