The present value of an ordinary annuity is used to compute the amount of a single deposit
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Question:
The present value of an ordinary annuity is used to compute the amount of a single deposit to be made today into an account earning interest of 6 percent per year compounded monthly. The deposit must be sufficient to cover a withdrawal of an equal amount each month for 10 years. At the end of the 10 years, the balance in the account should be $0. To solve for the amount needed (the present value), the total number of conversion period (n) is __________ and the interest rate per conversion period is __________.
A. 10 periods, 6 percent
B. 10 periods, 0.5 percent
C. 120 periods, 6 percent
D. 120 periods, 0.5 percent
Related Book For
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
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