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

The formula for calculating the future value of an annuity is FV = (PMT x [((1 + r)^n - 1)/r]), where PMT is the annuity payment, r is the discount rate, and n is the number of periods.

Substitute the given values into the formula:

FV = (10 x [((1 + 0.05)^50 - 1)/0.05])
FV = $2,093.48

Therefore, the best answer is D.

An Annuity Pays $10 Per Year for 50 Years