An annuity pays $50 per year for 20 years. What is the future value (FV) of this annuity at the end of those 20 years, given that the discount rate is 7%?

Question

Quizplus · Accepted Answer

You can use the formula FV = C[(1+r)^n - 1]/r, where C is the annual payment, r is the discount rate, and n is the number of years. Plugging in the numbers, FV = $50[(1+0.07)^20 - 1]/0.07 = $2049.77. Therefore, the answer is choice A.

An Annuity Pays $50 Per Year for 20 Years