Question

1) Company A wishes to know how much money it will have in 5 years if...

1) Company A wishes to know how much money it will have in 5 years if five equal amounts of $40 000 are invested with the first payment invested immediately. What is the interest table appropriate for this situation: present value of an ordinary annuity, the future value of an ordinary annuity, the present value of an annuity due, or future value of an annuity due? Please explain

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Answer #1

Correct Answer : Future Value of an Annuity Due table would be used in order to calculate the future value or maturity value of annuities that are being invested , as the first payment is made immediately hence the "DUE" is used . Therefore in order to calcukate the Future Value of Annuities , the first payment of whcih is deposited immediately FUTURE VALUE OF ANNUITY DUE Table is required to be used.

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