Question

Find the future value of an annuity due of $500 each quarter for 4.5 years at 11%, compounded quarterly. (Round your answer to the nearest cent.)

Answer 1

Annuity due means periodical amount at the beginning of each period.

Future Value of annuity due

=

Annuity Amount x Future Value of annuity due of 1

=

$             500

x

23.52301

=

$ 11,761.51

Working:

Future Value of annuity due of 1

=

((((1+i)^n)-1)/i)*(1+i)

Where,

=

((((1+0.0275)^18)-1)/0.0275)*(1+0.0275)

i

11%/4

=

0.0275

=

23.52301

n

4.5*4

=

18