The future value of a $500 annuity due received for three years is $________,assuming an investment rate of 10%.
A)1,655.00
B)665.50
C)1,820.50
D)335.65

Question

Quizplus · Accepted Answer

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

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

where Pmt = Payment amount, r = interest rate, and n = number of periods.

Plugging in the given values, we get:

FV = 500 x (1 + 0.10) x ((1 + 0.10)^3 - 1)/0.10
FV = 500 x 1.10 x (1.331 - 1)/0.10
FV = 500 x 1.10 x 0.331/0.10
FV = 1,820.50

Therefore, the answer is C, $1,820.50.

The Future Value of a $500 Annuity Due Received for Three