Question

The future value of a $10,000 annuity due deposited at 12 percent compounded annually for each of the next 5 years is ________.

Answer 1

This is the concept of time value of money, the question requires us to find the future value of an amount which is deposited yearly, also called annuity. At a rate of 12% per year in 5 years. To get the future amount we use the formula;
A=P(1+r/100)^n
where;
A=future amount
P=principle (current amount)
r=rate
n=time
Thus substituting our values we obtain;
A=10000(1+12/100)^5
A=10000(1.12)^5
A=17,623.42
Therefore we conclude that after 5 years the amount will have compounded to $17,623.42

Answer 2

The answer to the question above is $17,623.41 ( Calculation: 17,623.41 = 10,000*(1+0.12)^5) based on the information shown on the question above. This problem can be solved using the future value formula which stated as FV = PV*(1+i)^n. In this formula, FV is the future value, PV is the present value, i is the interest rate, and n is the period of investing activity.