Question

Ted William made deposits of $500 at the end of each year for eight years the rate is 8% compounded annually what's the value of Teds annuity at the end of eight years

Answer 1

Compounded amount after 8 years will be $925.47

Explanation:

Ted deposited the amount = $500

Rate of interest = 8% compounded annually.

Time of period for investment = 8 years

By the formula of compound interest,

`C=P(1+(r)/(n))^(nt)`

Where C = compounded amount

P = Principal amount

r = rate of interest

t = Period of investment

n = number of times compounded in a year

`C=500(1+(0.08)/(1))^(1*8)`

`C=500(1.08)^(8)`

C = 500×1.8509

C = 925.47

Therefore, compounded amount after 8 years will be $925.47