Question

What is the accumulated sum of the following stream of payments? $12,391 every year at the beginning of each year for 11 years, at 7.99 percent, compounded annually.

Round the answer to two decimal places.

Answer 1

The accumulated sum will be received at the end of 11^th year will be as,

FV=PV(1+r)^n,

Where,

FV= Future Value

PV= Present Value

n= Number of years

r= Rate of interest

FV= $12,391(1+0.0799)¹¹

FV= $12,391(2.33)

FV= $28,871.03

Hence $28,871.03 will be received at the end of the 11^th year.