M5 4.4 Future Value of Ordinary Annuity

Multiple Choice

What is the Future Value of an Annuity?

• The Future Value Of An Annuity is the total value of irregular payments over unspecified time, without considering any interest rate.

• The Future Value Of Annuity is the total worth of a singular payment in future terms, without considering any interest rates.

• The Future Value Of An Annuity Is the total value that a series of regular payments will accumulate over a specific period, considering a specific interest rate or return on investment.

• The Future Value Of An Annuity is only the sum of individual payments without any compounding effect or interest rate consideration.

Multiple Choice

What is an Annuity in business terms?

• An Annuity, In Business, Involves Only A Single Payment Made Without Any Regularity In Intervals.

• Annuity In Business Terms Refers To A One-Time Payment Made At Irregular Intervals.

• In Business Terms, An Annuity Refers To Unequal Payments Made At Irregular Intervals.

• An Annuity, In Business Terms, Is A Series Of Equal Payments Made At Regular Intervals, Such As Monthly Or Annually.

Multiple Choice

______ is a series of periodic payments or receipts.

• Annuity

• Ordinary Annuity

• Annuity Due

Multiple Choice

______ is an annuity where payments are made at the beginning of each period.

• Annuity

• Ordinary Annuity

• Annuity Due

Multiple Choice

______ is an annuity where payments are made at the end of each period.

• Annuity

• Ordinary Annuity

• Annuity Due

Multiple Choice

A 5-year ordinary annuity has a future value of $1,000. If the interest rate is 8 percent, the amount of each annuity payment is closest to which of the following?

• $250.44

• $231.91

•   $184.08

• $181.62

• $170.44

Multiple Choice

When is payment made on an ordinary annuity?

• 
  Beginning of the period

• First 3 days of the period

• 
  Middle of the period

• End of the period

Multiple Choice

When is payment made on an annuity due?

• 
  Beginning of the period

• Three times during the period

• Middle of the period

• 
  End of the period

Multiple Choice

What is the main difference between an annuity and a compound interest investment?

• 
  A series of payments is made for annuities.

• 
  The cash value of annuities can be figured using the compound interest table.

• 
  Compound interest investments are for a shorter time period.

• 
  Annuities involve a series of payments of usually differing amounts, whereas compound investments involve regular contributions of equal amounts.

Multiple Choice

Find the future value of a quarterly annuity of $2,000 at 8% for 4 years compounded quarterly.

• 
  $32,000.00

• $42,240.00

• 
  $37,278.00

• 
  $36,240.00