Question

Find the future value of the following ordinary simple annuity.

Periodic Payment - $480.00

Payment Interval - 3 months

Term - 10.25 years

Interest Rate - 5%

Conversion period - Quarterly

The future value is $___ ?

(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)

Answer 1

future value of annuity = A*[(1+r)^n-1]/r

here,

A = 480

r=5% per annum

=>5%*3/12

=>1.25%. per quarter

=>0.0125.

n=10.25 years* 4 periods per year=>41

future value of annuity = 480*[(1.0125)^(41)-1]/r

=>480*53.133177

=>$25,503.93