Which financial math approach would you use to analyze a legal settlement's value in the future? The settlement is paid in twenty-five annual installments, beginning today, settlement date?
A) Future Value of a Lump Sum
B) Future Value of an Annuity Due
C) Future Value of an Ordinary Annuity

Question

Quizplus · Accepted Answer

Since the payments begin today, on the settlement date, this scenario is best analyzed using the Future Value of an Annuity Due approach. An annuity due signifies that payments are made at the beginning of each period, which aligns with the described payment structure of the legal settlement.

Which Financial Math Approach Would You Use to Analyze a Legal