Question

A house is rented for $7,200 per quarter, with each quarter's rent payable in advance. If money is worth 5%, compounded quarterly, and the rent is deposited in an account, what is the future value of the rent for one year? (Round your answer to the nearest cent.)

Answer 1

Future Value of an Annuity Due
c= Cash Flow	7200
i= Interest Rate =5%/4 =	1.25%
n= Number Of Periods =1*4 =	4
Future Value of an Annuity Due
= C*[(1+i)^n-1]/i] * (1+i)
Where,
c= Cash Flow per period
i = interest rate per period
n=number of period
= $7200[ (1+0.0125)^4 -1 /0.0125] * (1 +0.0125)
= $7200[ (1.0125)^4 -1 /0.0125] * 1.0125
= $7200[ (1.0509 -1 /0.0125] * 1.0125
= $29,711.32