Use this information to answer the following question. $\begin{array}{|c|c|c|}
\hline \text { Periods } & \text { Future Value of } \$ 1 \text { at } 12 \text { Percent } & \begin{array}{c}
\text { Future Value of Ordinary Annuity of } \$ 1 \
\text { at } 12 \text { Percent }
\end{array} \
\hline 1 & 1.120 & 1.000 \
\hline 2 & 1.254 & 2.120 \
\hline 3 & 1.405 & 3.374 \
\hline
\end{array}$ If an accumulation of $8,000 is desired at the end of three years, what amount must be deposited at the end of each of the three years?
A) $2,371.07
B) $26,992.00
C) $5,693.95
D) $11,240.00

Question

Quizplus · Accepted Answer

The future value of an ordinary annuity is the sum of the future values of each individual payment. In this case, we have three payments of $1, so the future value of the annuity is 3.374. To find the amount that must be deposited at the end of each year, we divide the desired accumulation by the future value of the annuity. Therefore, the amount that must be deposited at the end of each year is $8,000 / 3.374 = $2,371.07.

Use This Information to Answer the Following Question If an Accumulation of $8,000 Is Desired at the End