Question

To determine how much you would need to save each year to reach a specific goal, you would use

A) Present Value of $1.
B) Future Value of $1.
C) Present Value of an annuity.
D) Future Value of an annuity.

Answer 1

D) Future Value of an annuity.

Step-by-step explanation:

Recurring equal amount of savings is considered an annuity. The future goal that you would want to reach is referred to as the future value of the annuity payments. In order to find how much you would need to save per year, you will compute PMT using a financial calculator.Choices A and B apply for present value and future value of one-time payment respectively.