If you were to put $1,000 in the bank at 6% interest each year for the next ten years, which table would you use to find the ending balance in your account?
A. A)Â Â Present value of $1
B. B)Â Â Future value of $1
C. C)Â Â Present value of an annuity of $1
D. D)Â Â Future value of an annuity of $1
Solution
Asnwer si D) Future value of annuity of $1
Annual investment of equal amount for a period is referred to as annuity. Hence investment of $1,000 each year for 10 year is an annuity. To find the ending balance after 10 years, table to be used is of Future value of annuity for $1. The value from the table shall be multiplied with $1,000 to get the ending balance.
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If you were to put $1-000 in the bank at 6- interest each year for the.docx
1. If you were to put $1,000 in the bank at 6% interest each year for the next ten years, which table
would you use to find the ending balance in your account?
A. A)Â Â Present value of $1
B. B)Â Â Future value of $1
C. C)Â Â Present value of an annuity of $1
D. D)Â Â Future value of an annuity of $1
Solution
Asnwer si D) Future value of annuity of $1
Annual investment of equal amount for a period is referred to as annuity. Hence investment of
$1,000 each year for 10 year is an annuity. To find the ending balance after 10 years, table to be
used is of Future value of annuity for $1. The value from the table shall be multiplied with
$1,000 to get the ending balance.
