Find the future value of the annuity.
-There are payments of $100 at the end of each year for 11 years at 3% interest compounded annually
A) $1280.78
B) $4614.11
C) $1146.39
D) $447.97

Question

Quizplus · Accepted Answer

The future value of an annuity is the sum of the present values of each payment. The present value of each payment is the payment divided by (1 + r)^n, where r is the interest rate and n is the number of years. In this case, the present value of each payment is $100 / (1 + 0.03)^n. The future value of the annuity is the sum of the present values of each payment, which is $100 / (1 + 0.03)^n + $100 / (1 + 0.03)^(n-1) + ... + $100 / (1 + 0.03). This can be simplified to $100 * (1 - (1 + 0.03)^-11) / 0.03, which is $1280.78.

Find the Future Value of the Annuity