Podcast
Questions and Answers
What is the primary characteristic of a future value annuity?
What is the primary characteristic of a future value annuity?
- It involves making regular payments into an account that earns compound interest. (correct)
- It involves a single lump sum payment at the end of the investment period.
- It has a fixed interest rate that never changes.
- It earns simple interest over the investment period.
What does the variable 'F' represent in the future value of an annuity formula?
What does the variable 'F' represent in the future value of an annuity formula?
- Number of periods
- Payment amount per period
- Interest rate per period
- Future value of the annuity (correct)
What is the formula for calculating the future value of an annuity?
What is the formula for calculating the future value of an annuity?
- $F = x \* [(1 + i)^n - 1]$
- $F = x \* [(1 + i)^n - 1] / i$ (correct)
- $F = x \* (1 + i)^n$
- $F = x \* [(1 + i)^n - 1] / i^2$
What is the result of adding up all the payments made into an annuity account over time?
What is the result of adding up all the payments made into an annuity account over time?
What is the purpose of the interest rate 'i' in the future value of an annuity formula?
What is the purpose of the interest rate 'i' in the future value of an annuity formula?
If an annuity has a payment amount of $500 per quarter, and an interest rate of 2% per quarter, how would you calculate the future value of this annuity after 10 years?
If an annuity has a payment amount of $500 per quarter, and an interest rate of 2% per quarter, how would you calculate the future value of this annuity after 10 years?
What happens to the future value of an annuity if the payment amount increases, but the interest rate remains constant?
What happens to the future value of an annuity if the payment amount increases, but the interest rate remains constant?
An annuity has a payment amount of $1,000 per year, and an interest rate of 5% per year. If the interest rate increases to 6% per year, what happens to the future value of the annuity?
An annuity has a payment amount of $1,000 per year, and an interest rate of 5% per year. If the interest rate increases to 6% per year, what happens to the future value of the annuity?
What is the relationship between the number of periods (n) and the future value of an annuity?
What is the relationship between the number of periods (n) and the future value of an annuity?
If an annuity has a payment amount of $200 per month, and an interest rate of 3% per year, what would you need to do to calculate the future value of this annuity after 5 years?
If an annuity has a payment amount of $200 per month, and an interest rate of 3% per year, what would you need to do to calculate the future value of this annuity after 5 years?
Flashcards are hidden until you start studying
