First calculate the future value of the annuity The formula to find the future value of an annuity ordinary is Fv=pmt [((1+r/k)^(kn)-1)÷(r/k)] Fv future value? PMT quarterly payment 1500 R interest rate 0.12 K compounded quarterly 4 N time 4 years Fv=1,500×(((1+0.12÷4)^(4×4) −1)÷(0.12÷4)) =30,235.32
Now compare the amount of the annuity with amount of the gift 30,235.32−30,000=235.32 So as you can see the amount of the annuity is better than the amount of the gift by 235.32