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Lisa wants to invest a certain sum of money at the end of each year for five years. The investment will earn 6% compounded annually. At the end of five years, she will need a total of $40,000 accumulated. How should she compute her required annual investment?

a. $40,000 times the present value of a 5-year, 6% ordinary annuity of 1 factor.

b. $40,000 divided by the future value of a 5-year, 6% ordinary annuity of 1 factor.

c. $40,000 times the future value of a 5-year, 6% ordinary annuity of 1 factor.

d. $40,000 divided by the present value of a 5-year, 6% ordinary annuity of 1 factor.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9445008

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