Question

Find the future value (FV) of the annuity due. (Round your answer to the nearest cent.) $175 monthly payment, 7% interest, 11 years

Answer 1

The future value of the annuity due to the nearest cent is $2956.

Explanation:

Consider the provided information:

It is provided that monthly payment is $175, interest is 7% and time is 11 years.

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

`FV of Annuity Due = (1+r)* P[((1+r)^(n)-1)/(r)]`

Now, substitute P = 175, r = 0.07 and t = 11 in above formula.

`FV of Annuity Due = (1+0.07)* 175[((1+0.07)^(11)-1)/(0.07)]`

`FV of Annuity Due = (1.07)* 175[(1.10485)/(0.07)]`

`FV of Annuity Due = 187.5(15.7835)`

`FV of Annuity Due = 2955.4789`

Hence, the future value of the annuity due to the nearest cent is $2956.