A compound annuity uses the principles of
A)reinvesting and present value.
B)compound interest and future value.
C)reinvesting and compound interest.
D)compound interest and present value.
E)amortization and reinvesting.

Question

Quizplus · Accepted Answer

A compound annuity involves investing a fixed amount of money at regular intervals, and allowing the interest earned on those investments to compound over time. This means that both reinvesting (investing the returns earned on the initial investment) and compound interest (earning interest on both the initial investment and the returns) are key principles involved in a compound annuity. Choice C correctly identifies both of these principles.

A Compound Annuity Uses the Principles of