Question

Find the value of the annuity and interest ?Periodic Deposit: $10,000 at the end of every three monthsRate: 4.25% compounded quarterlyTime: 10 yearsA) $121,462; $278,538B) $480,113; $80,113C) $495,214; $95,214D) $1,436,391; $1,036,391

Answer 1

Step-by-step explanation:

We would apply the formula for calculating the future value of an annuity which is expressed as

S = R[(1 + i)^n - 1)/i]

where

R is the payment at the end of each period

i is interest rate per period.

n is the number of periods.

S is the future value

Since it is compounded quarterly, that means that payments are made 4 times per year. thus,

i = r/4

n = 4 x time

From the information given,

R = 10000

r = 4.25% = 4.25/100 = 0.0425

i = 0.0425/4 =