Janice Hardin sets aside $5,000 each year for 10 years.She then withdraws the funds on an equal annual basis for the next 10 years.The two tables she should use in the correct order are:
A) present value of an annuity of $1; future value of an annuity of $1.
B) future value of an annuity of $1; present value of an annuity of $1.
C) future value of an annuity of $1; present value of $1.
D) future value of an annuity of $1; future value of $1.

Question

Quizplus · Accepted Answer

Janice is setting aside a fixed amount of money each year for 10 years, so she needs to use the present value of an annuity of $1 to calculate the total amount she will have accumulated after 10 years. Then, she will be withdrawing the funds on an equal annual basis for the next 10 years, so she needs to use the future value of an annuity of $1 to calculate the total amount she will receive over those 10 years. Therefore, the correct order of tables is future value of an annuity of $1 followed by present value of an annuity of $1.

Janice Hardin Sets Aside $5,000 Each Year for 10 Years