Which of the following is the largest if the interest rate is 12 percent annually?
1) $100 compounded for three years
2) $100 annuity compounded for three years
3) the present value of $100 received after three years

Question

Which of the following is the largest if the interest rate is 12 percent annually?​
1) $100 compounded for three years
2) $100 annuity compounded for three years
​3) the present value of $100 received after three years

Quizplus · Accepted Answer

An annuity compounded for three years at a 12 percent annual interest rate will accumulate interest each year not only on the original amount but also on the interest from previous years, as well as the additional payments made each year. This results in a higher amount compared to a single sum compounded for the same period or the present value of a future sum.

Which of the Following Is the Largest If the Interest