ABC Insurance offers an annuity with 4.5% APR for the next 5 years. You decide to invest $1000 each year into this account. What type of annuity is this?

Question

Mathematics

Karter Malone

19 December, 04:27

ABC Insurance offers an annuity with 4.5% APR for the next 5 years. You decide to invest $1000 each year into this account. What type of annuity is this?

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Answers (2)

Know the Answer?

Braxton Armstrong · Answer 1

Braxton Armstrong 19 December, 05:45

0

reaccuring payment fixed annuity

Titus · Answer 2

Ordinary annuity

Step-by-step explanation:

Given : ABC Insurance offers an annuity with 4.5% APR for the next 5 years. You decide to invest $1000 each year into this account.

To find : What type of annuity is this?

Solution:

Annuity is the form of insurance in which some of the money is paid each year to secure for future.

There are two types of annuity:

Ordinary annuity - In this annuity the payment is made at the end of each period over a fixed length of time. Also in this annuity payments are made monthly, quarterly, semi-annually or annually.

Annuity due - is the opposite of ordinary annuity as in this the payment is made at the beginning of each period.

In the given situation the annuity is ordinary annuity because the investment is done each year for 5 years.