You are considering investing in a retirement fund that requires you to deposit $5,000 per year, and you want to know how much the fund will be worth when you retire. What financial technique should you use to calculate this value?
A)Future value of a single payment
B)Future value of an annuity
C)Present value of an annuity
D)Present value of a perpetuity

Question

Quizplus · Accepted Answer

Since the retirement fund requires you to deposit a fixed amount every year, the best financial technique to use would be the future value of an annuity. This will allow you to calculate the total value of the fund at the time of retirement, taking into account the annual deposits and the interest earned on those deposits over time.

You Are Considering Investing in a Retirement Fund That Requires