Question

Please show detailed work. Thank You.

​(Future value of an ordinary​ annuity) What is the future value of ​$500 per year for 10 years compounded annually at 5 ​percent? The future value of ​$500 per year for 10 years compounded annually at 5 percent is ​$nothing . ​(Round to the nearest​ cent.)

Answer 1

Present Value = $500* 1/ ( 1.05) ^ 1 +$500* 1/ ( 1.05) ^ 2 +$500* 1/ ( 1.05) ^ 3 +...+ $500* 1/ ( 1.05) ^ 10

= $ 3,860.87

Future Value = Present Value * ( 1+ Rate of Interest /100) ^ Time

= $ 3,860.87 * (1+ 5/100) ^ 10

= $ 6,288.95

Hence the correct answer is $ 6,288.95