Kathy spends $10 a week on lottery tickets. She wants to know how much she would...
Kathy spends $10 a week on lottery tickets. She wants to know how much she would have in five years is she were to take the $10 that she spends weekly on lottery tickets and invests it instead at a compound interest rate of 4%. To answer her question she should refer to which compound interest table?
| A. |
Future Value of an Annuity of $1 |
|
| B. |
Present Value of an Annuity of $1 |
|
| C. |
Future Value of $1 |
|
| D. |
Present Value of $1 |
Homework Answers
In the given question, Kathy wants to know the value she will have after 5 years, so she wants to know the Future Value. Also, she will be investing every week, hence it is an Annuity. So, we need to find the future value of an annuity. Hence, the table which should be used is Future Value of an Annuity of $1
Hence, the correct answer is A. Future Value of an Annuity of $1
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