An annuity pays $10 per year for 50 years. What is the future value (FV) of this annuity at the end of that 50 years, given that the discount rate is 5%?

Question

Quizplus · Accepted Answer

Using the formula for the future value of an annuity:

FV = PMT x ((1 + r)^n - 1) / r

where PMT is the annual payment, r is the discount rate, and n is the number of years.

Plugging in the values given:

FV = 10 x ((1 + 0.05)^50 - 1) / 0.05 = $2093.48

Therefore, the answer is B.

An Annuity Pays $10 Per Year for 50 Years