An annuity will pay you $5,000 per year for 25 years.What is the FV of this annuity at the end of 25 years,if your interest rate is 8%?

Question

Quizplus · Accepted Answer

To find the future value (FV) of the annuity, we can use the formula: FV = PMT x (((1+i)^n-1)/i), where PMT is the annual payment, i is the interest rate per period, and n is the number of periods. In this case, PMT = $5,000, i = 8%, and n = 25. Plugging in these values, we get:
FV = $5,000 x (((1+0.08)^25-1)/0.08) = $365,530
Therefore, the FV of the annuity is $365,530 at the end of 25 years, and the best choice is B.

An Annuity Will Pay You $5,000 Per Year for 25