Finding the compound sum of $1,000 to be received at the beginning of each of the next 5 years requires calculating the _____.
A) future value of an annuity
B) present value of an annuity
C) future value of an annuity due
D) present value of an annuity due

Question

Quizplus · Accepted Answer

The question specifically states that the $1,000 is to be received at the beginning of each year, which is an annuity due. Therefore, we need to calculate the future value of an annuity due. Choices A and B are incorrect because they refer to a regular annuity, which is not what is given in the question. Choice D is incorrect because it refers to the present value of an annuity due, which is not what we are trying to find.

Finding the Compound Sum of $1,000 to Be Received at the Beginning