Question

Jessica invests​ $250 each quarter in an ordinary annuity with a​ 5% interest rate compounded quarterly. Determine the accumulated amount in​ Jessica's annuity after 25 years.

Answer 1

Answer:

Step-by-step explanation:

Usimg formula for calculating compound interest.

A = P(1+r/n)^nt

P is the principal =$250

r is the rate = 5%

t is the time = 25years

n = 1/4(compounded quarterly)

Substituting to get the amount A.

A = 250(1+5/25)^25/4

A = 250(1+0.2)^6.25

A = 250(1.2)^6.25

A = 250(3.125)

A = $781.31

Hence the accumulated amount in​ Jessica's annuity after 25 years is $781.31