est: Module Examination This Question: 10 pts Time Remaining: 00:19:38 Submit 9
ID: 2576489 • Letter: E
Question
est: Module Examination This Question: 10 pts Time Remaining: 00:19:38 Submit 9 of 10 (7 complete) This Test: 100 pts poss Find the value of the ordinary annuity at the end of the indicated time period. The payment R, frequency of deposits m (which is the same as the frequency of compounding), annual interest rate r, and time t are given below Amount. S400, monthly: 65%,7 years The future value of the given annuity is $ Do not round until the final answer. Then-Found to the nearest cent as needed)Explanation / Answer
The value FV of an annuity R for n periods at interest rate of r% per annum is
FV =R x (((1+r)^n -1 )/r)
In the given question ,
R = $400,
n = 84 (12 x 7) , since interest is compounded monthly
r = 0.005 (6.5% / 12), since interest is compunded monthly.
FV = 400 x (((1+0.005)^84 -1)/0.005)
= 400 x ((1.52037-1)/0.005)
= 400 x (0.52037/0.005) = 400 x 104.0739 = $41,630.
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