Question
XYZ Insurance offers an annuity with 5% APR for the next 10 years. You decide to invest $1,000 each year into the account. What type of annuity is this?
Answers
GPT-4o mini
The annuity you are describing is a **fixed annuity** with **regular contributions**, specifically an **ordinary annuity** or **annuity due** depending on the timing of the contributions.
Since you mentioned that you are investing $1,000 each year for 10 years, this setup corresponds to an ordinary annuity if the payments are made at the end of each period (year) or an annuity due if the payments are made at the beginning of each period.
In this case, with annual contributions and a fixed interest rate of 5% APR, you would typically consider it an ordinary annuity unless specified otherwise regarding the timing of the payments.
Since you mentioned that you are investing $1,000 each year for 10 years, this setup corresponds to an ordinary annuity if the payments are made at the end of each period (year) or an annuity due if the payments are made at the beginning of each period.
In this case, with annual contributions and a fixed interest rate of 5% APR, you would typically consider it an ordinary annuity unless specified otherwise regarding the timing of the payments.