Lance Rice has decided to invest $1,200 quarterly for eight years in an ordinary annuity at 4%. The total cash value of the annuity at end of year 8 is

Question

Quizplus · Accepted Answer

The future value of an ordinary annuity can be calculated using the formula: FV = Pmt * [((1 + r)^nt - 1) / r], where Pmt is the payment amount, r is the interest rate per period, n is the number of periods per year, and t is the number of years. Here, Pmt = $1,200, r = 0.04/4 = 0.01, n = 4, and t = 8. Plugging these values into the formula gives the future value as $44,992.88.

Lance Rice Has Decided to Invest $1,200 Quarterly for Eight