Question

What is the future value of an annuity if the size of each payment is ₱2,500, payable atthe end of each quarter for 6 years, at an interest rate of 16% compounded quarterly?

Answer 1

The future value of an annuity A if the size of each payment after each quarter is given by P after n trimesters at an interest rate r is given by:

`A=P(\lbrack(r+1)^n-1\rbrack)/(r)`

For P = ₱2,500, r = 0.16 and n = 6*4 = 24, we have:

`\begin{gathered} A=2500(\lbrack(1.16^(24)-1\rbrack)/(0.16) \\ A=\text{ }₱534944.02 \end{gathered}`