Question

Stacey Beland invests $300 at the end of each quarter in an annuity that pays 10% interest per year, compounded quarterly. Find the amount of the annuity after 10 years. SHOW ALL WORK!

Answer 1

This can be solved using Future value of annuity formula

Future value of annuity is = P*((1+r)^n-1)/r

"P" is Quarterly deposit = $ 300/.

"r" is Quarterly interest rate = 10%/4 = 2.50%

"n" is No of quarters = 10*4 = 40

Future value of annuity is = Amount after 10 years = ?

Future value is = 300*((1+0.025)^40-1)/0.025

Future value is = 300*67.4026

Future value is = $ 20,220.77/. Approx.

Amount of the annuity after 10 years is $ 20,220.77/.