Question

Find the future value (FV) of the annuity due. (Round your answer to the nearest cent.) $175 monthly payment, 7% interest, 11 years

Answer 1

Answer:

The future value of the annuity due to the nearest cent is $2956.

Step-by-step explanation:

Consider the provided information:

It is provided that monthly payment is $175, interest is 7% and time is 11 years.

The formula for the future value of the annuity due is:

$FV of Annuity Due = (1+r)\times P[\frac{(1+r)^{n}-1}{r}]$

Now, substitute P = 175, r = 0.07 and t = 11 in above formula.

$FV of Annuity Due = (1+0.07)\times 175[\frac{(1+0.07)^{11}-1}{0.07}]$

$FV of Annuity Due = (1.07)\times 175[\frac{1.10485}{0.07}]$

$FV of Annuity Due = 187.5(15.7835)$

$FV of Annuity Due = 2955.4789$

Hence, the future value of the annuity due to the nearest cent is $2956.