Question

Which one of the following is an ordinary annuity ? Question 5 options: 1) $40 paid quarterly for 5 years, starting today 2) $50 paid weekly for 1 year, starting one week from today 3) $75 paid at the beginning of each monthly period for 50 years 4) $25 paid every year for ten years, starting today 5) $15 paid at the end of each monthly period for an infinite period of time

Answer 1

These answer choices are correct:

1) $40 paid quarterly for 5 years, starting today

3) $75 paid at the beginning of each monthly period for 50 years

4) $25 paid every year for ten years, starting today

Step-by-step explanation:

An ordinary annuity is a regular payment, by the same amount, under the same interest rate, and for a fixed number o periods, that is made at the beginning of the period.

Ordinary annuities can be paid daily, monthly, quaterly, annually, and they are still classified as ordinary annuity as long as the three previosly mentioned conditions are met.