6. What is the future value of the annuity if the quarterly payment is P500.00 with...

Question

Question

6. What is the future value of the annuity if the quarterly payment is P500.00 with an interest rate of 2% compounded monthly

Answer 1

Answer #1

Solution:

monthly interest rate = 2%/12 = 0.166666666%

Effective quarterly rate of interest = 1 * (1+0.0016666666)^3 - 1 = 0.500833793%

Quarterly payments = P500

Total payments = 25

Future value = P 500 * Cumulative FV factor at 0.500833793% for 25 periods

= P500 * 26.56182 = $13,280.91

Answer 2

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