Ali Shah Sets Aside $2,000 Each Year for Five Years

question 80

Multiple Choice

Ali Shah sets aside $2,000 each year for five years. He then withdraws the funds on an equal annual basis for the next four years. If Ali wishes to determine the amount of the annuity to be withdrawn in years 6 through 9, he should use the following two tables in this order:

• A)present value of an annuity of $1; future value of an annuity of $1
• B)future value of an annuity of $1; present value of an annuity of $1
• C)future value of an annuity of $1; present value of $1
• D)future value of an annuity of $1; future value of $1

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Definitions:

Federal Government

The national government of a federal country, which shares sovereignty with the subnational governments (states, provinces, etc.).

Government Purchases

Expenditures by government bodies on goods and services that directly contribute to a nation's aggregate demand.

Social Security Payments

Government transfers paid to eligible individuals, such as the retired, disabled, and survivors, aimed at providing a basic level of financial security.

Private Pensions

Retirement plans offered by private sector employers, unions, or other organizations to provide income to employees after retiring.