An Amount Is to Be Deposited in a Savings Account

question 133

Multiple Choice

An amount is to be deposited in a savings account at the end of each year in order to provide funds for a trip to Europe, at the end of the fourth year. You have been asked to determine the amount of the annual deposit. What is the interest concept that best describes this application?

• A) Present value of a single amount.
• B) Present value of an annuity.
• C) Future value of a single amount.
• D) Future value of an annuity.

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Definitions:

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