The future value of a $10,000 annuity due deposited at 12 percent compounded annually for each of the next 5 years is
A) $36,050.
B) $63,530.
C) $40,376.
D) $71,154.

Question

Quizplus · Accepted Answer

The formula for the future value of an annuity due is:

FV = PMT x [(1 + r)^n - 1] x (1 + r)

Where:
PMT = payment
r = interest rate
n = number of periods

In this case,
PMT = $10,000
r = 12% = 0.12
n = 5

Plugging these values into the formula, we get:

FV = $10,000 x [(1 + 0.12)^5 - 1] x (1 + 0.12) = $71,154.01

So the best choice is option D.

The Future Value of a $10,000 Annuity Due Deposited at 12