Sue Gray Wants to Invest a Certain Sum of Money

question 58

Multiple Choice

Sue Gray wants to invest a certain sum of money at the end of each year for five years. The investment will earn 6% compounded annually. At the end of five years, she will need a total of $40,000 accumulated. How should she compute her required annual invest-ment?

• A) $40,000 times the future value of a 5-year, 6% ordinary annuity of 1.
• B) $40,000 divided by the future value of a 5-year, 6% ordinary annuity of 1.
• C) $40,000 times the present value of a 5-year, 6% ordinary annuity of 1.
• D) $40,000 divided by the present value of a 5-year, 6% ordinary annuity of 1.

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