You have set a $100,000 goal for a college fund for your newborn child. You plan on having a fixed amount taken from your salary each month to meet this goal. The calculation to determine the monthly amount is called
A) planning and budgeting.
B) present value of an annuity.
C) future value of an annuity.
D) future value of a series of single payments.

Question

Quizplus · Accepted Answer

The calculation to determine the monthly amount needed to meet a future financial goal, like a $100,000 college fund, by making fixed payments is known as the future value of an annuity. This concept applies when you want to find out how much money you will accumulate over time by making regular, fixed payments into an account that earns interest.

You Have Set a $100,000 Goal for a College Fund