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Assertion: the future worth of a uniform series lies one period after the last payment. Reason: the factor is derived on the end-of-period convention.

  • A.the assertion is false although the reason offered is a true statement in itself
  • B.both the assertion and the reason are true and the reason explains the assertion
  • C.both the assertion and the reason are true but the reason does not explain the assertion
  • D.the assertion is true but the reason given for it is false

Answer: A

The convention is indeed the basis of the derivation, but it places the future worth at the date of the last payment, which earns no interest. It is the series present worth that sits one period outside the series, at the front.

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