If a father and mother set aside a certain amount each year for their daughter's college fund, which table would be used to determine the amount necessary to be put away each year in order to reach a certain goal once the daughter attends college?
A) The present value of $1
B) The future value of $1.
C) The future value of an annuity of $1.
D) Present value of an annuity of $1.

Question

Quizplus · Accepted Answer

The table for the future value of an annuity of $1 would be used to determine the amount necessary to be put away each year in order to reach a certain goal once the daughter attends college. This table shows the future value of equal periodic investments at a given interest rate over a specified period of time. Since the parents are making consistent contributions each year, an annuity table is applicable.

If a Father and Mother Set Aside a Certain Amount