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 "A" and "B."

Question

Quizplus · Accepted Answer

The best choice would be the future value of a $1 annuity, as it can efficiently calculate the total amount accumulated by the end of the five-year period when investing a fixed amount at regular intervals. The future value of $1 factor, while useful in other scenarios, would not consider the regular investments made throughout the five years. The present value factors would not be as relevant in calculating the amount accumulated at the end of the investment period. Therefore, the answer is B.

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