Asked by Carter Brown on Jul 12, 2024
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Kevin Nathan will deposit $1, 000 into a special account each year beginning December 31, 2010, with the last deposit being made on December 31, 2014.Kevin wants to know how much will be in his account on December 31, 2014, immediately after the final deposit, if the account earns 12% compounded annually.To solve the problem, Kevin must find the
A) future value of a single sum
B) future value of a deferred annuity
C) future value of an ordinary annuity
D) future value of an annuity due
Future Value
The value of an investment at a specific date in the future, calculated by applying expected rates of return.
Ordinary Annuity
A series of equal payments or receipts that occur at the end of each period for a fixed duration.
Compounded Annually
Describes the method by which the interest earned on an investment is calculated and added to the principal balance once per year, leading to an increase in the amount of future interest.
- Evaluate the future value of annuities by leveraging the frameworks of ordinary annuity and annuity due.
Verified Answer
Learning Objectives
- Evaluate the future value of annuities by leveraging the frameworks of ordinary annuity and annuity due.
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