Sandra won $5,000,000 in the state lottery, which she has elected to receive at the end of each month over the next 30 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

Sandra will be receiving a fixed amount of money at the end of each month over the next 30 years, which makes it an ordinary annuity. To determine the amount of her monthly check, she needs to calculate the present value of the annuity, since she wants to receive the money immediately. Therefore, she should use the present value of an ordinary annuity of 1 table.

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