Yamaha Inc

Multiple Choice

Yamaha Inc. hires a new chief financial officer and promises to pay him a lump-sum bonus four years after he joins the company. The new CFO insists that the company invest an amount of money at the beginning of each year in a 7% fixed rate investment fund to insure the bonus will be available. To determine the amount that must be invested each year, a computation must be made using the formula for:

A) The future value of a deferred annuity.
B) The future value of an ordinary annuity.
C) The future value of an annuity due.
D) None of these answer choices are correct.