An annuity with $1,000 annual payments at the end of each year, with a 10% interest rate, is worth how much at the end of four years?
A)$4,641.00
B)$3,169.87
C)$5,105.10
D)None of the above

Question

Quizplus · Accepted Answer

The future value of an annuity is calculated using the formula: FV = P * [(1 + r)^n - 1] / rwhere:P is the annual paymentr is the interest raten is the number of yearsIn this case, P = $1,000, r = 10%, and n = 4. Plugging these values into the formula, we get:FV = $1,000 * [(1 + 0.10)^4 - 1] / 0.10= $1,000 * [1.4641 - 1] / 0.10= $1,000 * 0.4641= $4,641.00Therefore, the annuity is worth $4,641.00 at the end of four years.

An Annuity with $1,000 Annual Payments at the End of Each