Calculating Future and Present Value of Ordinary Annuities

What type of annuity involves payments made at the end of each period?

• Deferred annuity

• Immediate annuity

• Annuity due

• Ordinary annuity

Which formula is used to calculate the future value of an annuity?

• N = ...

• R = ...

• S = ...

• P = ...

What does the variable 'R' represent in the annuity formulas?

• Interest rate

• Number of payments

• Regular payment amount

• Present value

If payments are made quarterly, what is the value of 'n' in the annuity formulas?

• 12

• 1

• 4

• 2

How does increasing the frequency of payments affect the future value of an annuity?

• Has no effect on the future value

• Increases the future value

• Only changes the interest rate

• Decreases the future value

What is the effect of compounding on the future value of an annuity?

• Decreases the number of payments

• Increases the future value

• No effect

• Reduces the future value

What is the primary purpose of calculating the present value of an annuity?

• To find out the worth of future payments in today's terms

• To determine the total future payments

• To establish the number of payments

• To calculate the interest rate

In the context of a car loan, what does solving for 'R' help determine?

• Number of payments

• Total loan amount

• Interest rate per period

• Monthly payment amount

What does the term 'compounded monthly' imply about the value of 'n'?

• n = 1

• n = 4

• n = 12

• n = 2

For a 30-year home mortgage, what is the total number of payments?

• 30

• 12

• 360

• 120