The Future Value of a $10,000 Annuity Due, Deposited at 12

question 73

Multiple Choice

The future value of a $10,000 annuity due, deposited at 12 percent compounded annually for each of the next 5 years is ________ .

• A) $71,154
• B) $36,050
• C) $40,376
• D) $63,530

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Definitions:

Substitution Effect

The change in the consumption pattern of goods or services due to a change in their relative prices, causing consumers to replace more expensive items with cheaper alternatives.

Income Effect

The change in the quantity demanded of a good resulting from a change in consumer income, holding prices constant.

Inelastic Demand

A situation where the demand for a product does not significantly change with a change in price.

Total Revenues

The overall amount of money generated from sales of goods or services before deducting any expenses.