Question

Future Value of Annuity Due 19. After consulting with your financial advisor, you figured that you need to invest $10,000 per year to accumulate enough money for your retirement. Assuming a rate of return of 8% and depositing $10,000 at the beginning of every year in your retirement account, how much will you have after 40 years? a. $2,797,810 20. After consulting with your financial advisor, you figured that you need to invest $10,000 per year to accumulate enough money for your retirement. Assuming a rate of return of 6% and depositing $10,000 at the beginning of every year in your retirement account, how much will you have after 40 years? a. $1,640,477 21. After consulting with your financial advisor, you figured that you need to invest $10,000 per year to accumulate enough money for your retirement. Assuming a rate of return of 8% and depositing $10,000 at the beginning of every year in your retirement account, how much will you have after 20 years? a. $494,229

Answer 1

Future value of annuity due=(1+rate)*Annuity[(1+rate)^time period-1]/rate

1.Future value=1.08*10,000[(1.08)^40-1]/0.08

=10,000*279.78104

=$2797810(Approx).

2.Future value=1.06*10,000[(1.06)^40-1]/0.06

=10,000*164.047684

=$1640477(Approx).

3.Future value=1.08*10,000[(1.08)^20-1]/0.08

=10,000*49.4229214

=$494229(Approx).