Question

Find the value of the ordinary annuity at the end of the indicated time period. The payment​ R, frequency of deposits m​ (which is the same as the frequency of​ compounding), annual interest rate​ r, and time period t are given.

amount ​$500​; quarterly​; 7​%; five years

Answer 1

- Perioidic Quarterly Annuity for 5 years = $500

Calculating the Future Value of the ordinary annuity at the end of the year end 5:-

Where, C= Periodic Payments = $500

r = Periodic Interest rate = 7%/4 = 1.75%

n= no of periods = 5 years*4 = 20

Future Value = $11,850.81

So, the value of the ordinary annuity at the end of the Year 5 is $11,850.81

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