Sandra won $5,000,000 in the state lottery, which she has elected to receive at the end of each month over the next 30 years. She will receive 7% interest on unpaid amounts. To determine the amount of her monthly check, she should use a table for the:
A) Present value of an annuity due of $1.
B) Future value of an annuity due of $1.
C) Present value of an ordinary annuity of $1.
D) Future value of an ordinary annuity of $1.

Question

Quizplus · Accepted Answer

Sandra will be receiving a fixed amount every month for the next 30 years, making this an ordinary annuity. To determine the amount of her monthly check, she needs to calculate the present value of the annuity. Therefore, she should use a table for the Present value of an ordinary annuity of $1. Choice C is the only option that fits this criteria, making it the best choice.

Sandra Won $5,000,000 in the State Lottery, Which She Has