The future value of an ordinary annuity consisting of 10 annual payments is $1593.74.The interest rate is 10% p.a.compounded annually;therefore the amount of each payment must be how much?
A)$120.00
B)$90.00
C)$110.00
D)$100.00

Question

Quizplus · Accepted Answer

The future value of an ordinary annuity can be calculated using the formula: FV = P * [((1 + r)^n - 1) / r], where FV is the future value, P is the payment amount, r is the annual interest rate, and n is the number of payments. Rearranging the formula to solve for P gives us P = FV / [((1 + r)^n - 1) / r]. Plugging in the given values (FV = $1593.74, r = 0.10, n = 10) gives us P = $100.

The Future Value of an Ordinary Annuity Consisting of 10