Interactive practice questions
Which of the following best describes an annuity?
An investment in which an investor only makes regular withdrawals of a fixed amount.
An investment in which an investor makes regular deposits or withdrawals. The amount of each deposit or withdrawal can vary.
An investment in which an investor makes regular deposits or withdrawals of a fixed amount.
An investment in which an investor makes regular deposits only. The amount of each deposit can vary.
Complete the following sentences relating to annuities.
Dave opens a savings account at the start of year and will have invested $\$8000$$8000 at the end of each year for $3$3 years. The account pays $6%$6% p.a. with interest compounded annually.
Buzz invests $\$3000$$3000 at the end of each year for $3$3 years in a savings account that pays $7%$7% per annum with interest compounded annually.