The answer tells me to take 1,000,000 divided by 5.11 = 195,695 because it's an anuity in advance. But in my head, when I read this questions it looks like an ordinary annuity. Ashe makes the first payment on September 1st, which is at the end of the period. Or is September 1st the beginning of the period? Then it should end on October 31..... ahhhh! I can't get this! What am I missing?
On March 15, 1990, Ashe Corp. adopted a plan to accumulate $1,000,000 by September 1, 1994. Ashe
plans to make four equal annual deposits to a fund that will earn interest at 10% compounded annually.
Ashe made the first deposit on September 1, 1990. Future value and future amount factors are as
follows:
Future value of 1 at 10% for 4 periods 1.46
Future amount of ordinary annuity of 1 at 10% for 4 periods 4.64
Future amount of annuity in advance of 1 at 10% for 4 periods 5.11
Ashe should make four annual deposits (rounded) of:
a. $250,000
b. $215,500
c. $195,700
d. $146,000
