Question 8 Use the following 10% interest factors. Present Value of ;.uiure valu

Question

Question 8 Use the following 10% interest factors. Present Value of ;.uiure value «. 7 periods 8 periods 9 periods Ordinary Annuity 4.8684 5.3349 5.7590 9.48717 11.43589 13.57948 What wil be the balance on September 1, 2024 in a fund which is accumulated by making $44000 annual deposits each September 1 beginning in 2017, with the last deposit being made on September 1, 20247 The fund pays interest at 10% compounded annually O $503179 O $417438 O $353700 $234736 Click if you would like to Show Work for this question: Opn Show Work LINK TO TEXT

Explanation / Answer

This is the calculation of future value of annuity (FV):

There are 7 years because 2017 to 2024 is gap of 7; but interest will be accumulated for 1 more year, since deposits are made at the beginning of period. Therefore, the total period is (7 + 1 =) 8.

Yearly deposit (A) = 44,000

Rate of interest = r = 0.10

Now as per the Annuity table, the future value factor for 10% rate on 8 years is 11.43589.

Thus,

The required balance = A × FV factor

                                    = 44,000 × 11.43589

                                    = 503,179.16

                                    = 503,179

Answer: 1st option

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