11. What is the future value of $5.000 per year annuity at a discount rate of...

Question

Question

11. What is the future value of $5.000 per year annuity at a discount rate of 10% for 4 years?

Answer 1

Answer #1

Future value of an annuity = C*[((1+r)^t-1)/r]
where C is the annuity payment that is 5000.
r is the interest rate that is 10%.
t is the time period in years.

Future value of the annuity	5000*[((1.10)^4-1)/.10]
Future value of the annuity	5000*[(1.4641-1)/.10]
Future value of the annuity	5000*[(.4641)/.10]
Future value of the annuity	5000*[4.641]
Future value of the annuity	23205

The future value of the annuity is $23205.

Answer 2

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