State whether the problem relates to an ordinary annuity or an annuity due. A couple has determined that they need $400,000 to establish an annuity when they retire in 25 years. How much money should they deposit at the end of each month in an investment plan that pays an annual rate of 8%, compounded monthly, so they will have the $400,000 in 25 years?
A)ordinary annuity
B)annuity due

Question

State whether the problem relates to an ordinary annuity or an annuity due. A couple has determined that they need $400,000 to establish an annuity when they retire in 25 years. How much money should they deposit at the end of each month in an investment plan that pays an annual rate of 8%, compounded monthly, so they will have the $400,000 in 25 years? ​
A)ordinary annuity
B)annuity due

Quizplus · Accepted Answer

The problem involves a series of regular payments deposited at the end of each month, which is characteristic of an ordinary annuity. In an annuity due, the payments would be made at the beginning of each month.

State Whether the Problem Relates to an Ordinary Annuity or an Annuity