Jorgen Grace made deposits of $250 at the end of each year for 12 years. The rate received was 6% annually. What is the value of the investment after 12 years?

Question

Quizplus · Accepted Answer

This is a case of annuity due where equal payments are made at the beginning of each year. Using the formula for the future value of an annuity due, we get:

FV = P * ((1 + r)^(n+1) - 1)/r

where P is the payment, r is the interest rate, and n is the number of periods. Plugging in the given values, we get:

FV = 250 * ((1 + 0.06)^(12+1) - 1)/0.06
FV = $4,217.48

Therefore, the best choice is C, which matches the calculated value.

Jorgen Grace Made Deposits of $250 at the End of Each