Johnson Has an Annuity Due That Pays $600 Per Year

question 75

Multiple Choice

Johnson has an annuity due that pays $600 per year for 15 years.(Note: There are 15 annual cash flows with the first cash flow occurring today.) What is the value of the cash flows 14 years from today (immediately after the last deposit is made) if they are placed in an account that earns 7.50%?

• A)$9,000.00
• B)$9,675.00
• C)$15,671.02
• D)$16,846.35

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Definitions:

Wilcoxon Rank Sum Test

A nonparametric statistical test used to compare two independent samples to determine if they come from the same distribution.

Independent Samples

Two or more sets of observations that are collected independently of each other, often compared in hypothesis testing to assess whether there are differences between groups.

Ordinal Data

A type of data that represents categories with a meaningful order, but differences between categories are not necessarily consistent.

Nonparametric Test

Statistical tests that do not assume a particular distribution of the data, useful for ordinal or nominal data.