A customer is considering buying a new $30,000 car and will put $6,000 down and will borrow the remaining $24,000 from the autom
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Answer:
Amount at the end of twentieth year is $12,300
Explanation:
Annuity means a set of fixed amount of payments either made to you or paid by you , at a fixed number of times over a course of defined period.
The case given in the question is of ordinary annuity , where fixed amount of payment are required at the end of each period.
FORMULA FOR FUTURE VALUE ORDINARY ANNUITY =
Where, C(cash flow) = $300,
I(interest rate) = 7%
N(number of period) = 20
FV ( Future value)
= 861/7%
= $12,300