If the interest rate is 10%, the factor for the future value of annuity due of 1 for n = 5, i = 10% is equal to the factor for the future value of an ordinary annuity of 1 for n = 5, i = 10%
A) plus 1.10
B) minus 1.10
C) multiplied by 1.10
D) divided by 1.10

Question

Quizplus · Accepted Answer

The future value of an annuity due is equal to the future value of an ordinary annuity multiplied by (1 + i), where i is the interest rate. This accounts for the additional period of interest earned on each payment due to payments being made at the beginning of each period.

If the Interest Rate Is 10%, the Factor for the Future