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if the current rate of interest is 8% APR, then future value of an investment that...

if the current rate of interest is 8% APR, then future value of an investment that pays $250 per quater and lasts 20 years is closet to:

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Answer #1

Future Value of an Ordinary Annuity

Here, we’ve quarterly deposit (P) = $250

Quarterly interest rate (r) = 2.00% [8.00% / 4 Quarters]

Number of periods (n) = 80 Years [20 Years x 4 Quarters]

Therefore, Future Value of an Ordinary Annuity = P x [{(1+ r)n - 1} / r ]

= $250 x [{(1 + 0.02)80 - 1} / 0.02]

= $250 x [(4.875439156 – 1) / 0.02]

= $250 x [3.875439156 / 0.02]

= $250 x 193.7719578

= $48,442.99

Hence, the Future Value of the Investment will be $48,442.99

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