The future value three years from today of a $100 three-year annuity due compounded at a rate of 10% is equal to ________.
A)$300.00
B)$331.00
C)$364.10
D)$133.10

Question

Quizplus · Accepted Answer

To find the future value of an annuity due, we use the formula:

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

Where:
PMT = Payment = $100 (since it's an annuity due)
r = interest rate per period = 10%
n = number of periods = 3 years

Plugging in the numbers, we get:

FV = 100 * ((1 + 0.10)^(3+1) - 1) / 0.10) = $364.10

Therefore, the answer is C.

The Future Value Three Years from Today of a $100