Final answer:
The future value of an annuity due with annual payments of $12,529 for 6 years at a return rate of 5.51% can be calculated using the annuity due formula, accounting for the payments being made at the beginning of each period.
Step-by-step explanation:
The future value of an annuity due can be calculated using a formula that accounts for the payments being made at the beginning of each period. Since we are dealing with an annual payment of $12,529 for 6 years with a required return rate of 5.51%, we use the future value of an annuity due formula, FV = P * [((1 + r)^t - 1) / r] * (1 + r), where P is the annual payment, r is the periodic interest rate (in decimal), and t is the number of periods. The calculation follows these steps:
- Calculate the periodic interest rate by converting the percentage to a decimal: r = 0.0551.
- Calculate the future value of a regular annuity using the formula: FV = $12,529 * [((1 + 0.0551)^6 - 1) / 0.0551].
- Since it is an annuity due, multiply the result by (1 + r) to adjust for the payments being made at the beginning of the period to achieve the future value of an annuity due.
Calculations should be done to the penny as required by the question to find the exact future value.