The future value of an ordinary annuity paying $3600 annually for 7 years at an interest rate of 12% per annum compounded annually is:
A)$36 320.44.
B)$38 900.29.
C)$35 600.20.
D)$37 826.98.

Question

Quizplus · Accepted Answer

The future value of an ordinary annuity is calculated using the formula:FV = P * [(1 + r)^n - 1] / rwhere:P is the annual paymentr is the annual interest raten is the number of yearsIn this case, P = $3600, r = 12%, and n = 7. Plugging these values into the formula, we get:FV = $3600 * [(1 + 0.12)^7 - 1] / 0.12= $3600 * [2.0136 - 1] / 0.12= $3600 * 1.0136 / 0.12= $36 320.44Therefore, the future value of the annuity is $36 320.44.

The Future Value of an Ordinary Annuity Paying $3600 Annually