Sandra won $5,000,000 in the state lottery which she has elected to receive at the end of each month over the next thirty years. She will receive 7% interest on unpaid amounts. To determine the amount of her monthly check, she should use a table for the:
A)Present value of an annuity of 1.
B)Future value of an annuity due of 1.
C)Present value of an ordinary annuity of 1.
D)Future value of an ordinary annuity of 1.

Question

Quizplus · Accepted Answer

The present value of an ordinary annuity of 1 is the most appropriate type of annuity table to use in this scenario because Sandra will receive the same amount of money at the end of each month for the next thirty years. The present value of an ordinary annuity of 1 takes into account the time value of money and provides the present value of a series of equal payments to be received at regular intervals in the future. This table will help Sandra determine the amount of her monthly check based on the interest rate and the length of the payout period.

Sandra Won $5,000,000 in the State Lottery Which She Has