Question

Find the future value of an ordinary annuity of $200 paid quarterly for 6 years, if the interest rate is 10%, compounded quarterly. (Round your answer to the nearest cent.)

Answer 1

Answer:

Future value is $1543.12

Step-by-step explanation:

From the question, present value = $200, rate = 10%, years = 6.

So that future value of ordinary annuity can be calculated by,

FV = $\frac{A{[(1+r)^{n} - 1]}}{r}$

where: FV is the future value, A is the annuity, r is the rate, and n is the number of years.

FV = $\frac{200[(1+0.1)^{6}-1] }{0.1}$

    = $\frac{200[1.1^{6}- 1] }{0.1}$

    = $\frac{200*0.771561}{0.1}$

    = $\frac{154.3122}{0.1}$

FV = $1543.122  

The future value of the ordinary annuity is $1543.12.