You desire to invest $3,000 at the end of each year for the next five years to accumulate the funds needed for a down payment on a home. Which table factor(s) should be used to most efficiently determine the amount accumulated by the end of the five-year period?
A) Future value of $1.
B) Future value of a $1 annuity.
C) Present value of $1.
D) Present value of a $1 annuity.
E) Both Future value of $1 and Future value of a $1 annuity.

Question

Quizplus · Accepted Answer

Since the investment involves making regular (annual) payments for a specific period (5 years) to accumulate a sum, the future value of a $1 annuity table factor is the most appropriate to use. This factor helps in calculating the future value of a series of equal, end-of-period payments.

You Desire to Invest $3,000 at the End of Each