Final answer:
To calculate the future value of an annuity, use the formula FV = Pmt * [(1 + r)^n - 1] / r. For the given example with $200 payments, a 6% interest rate, and a 10-year duration, the future value is approximately $2,636.16.
Step-by-step explanation:
The question is about calculating the future value of an annuity with regular payments and a fixed interest rate.To find the approximate future value of an annuity, you can use the future value annuity formula:FV = Pmt * [(1 + r)^n - 1] / rWhere:The question is about calculating the future value of an annuity with regular payments and a fixed interest rate.To find the approximate future value of an annuity, you can use the future value annuity formula:FV = Pmt * [(1 + r)^n - 1] / rWhere:FV = Future Value of the annuityPmt = Payment amount per periodn = Number of periodsIn this case, with regular paments (Pmt) of $200, an annual interest rate (r) of 6% (or 0.06), and over 10 years (n = 10), the formula is:FV = $200 * [(1 + 0.06)^10 - 1] / 0.06Calculating this gives us a value which indicates that the correct answer to the question is $2,636.16 (option c).
FV = Future Value of the annuityPmt = Payment amount per periodn = Number of periodsIn this case, with regular paments (Pmt) of $200, an annual interest rate (r) of 6% (or 0.06), and over 10 years (n = 10), the formula is:FV = $200 * [(1 + 0.06)^10 - 1] / 0.06Calculating this gives us a value which indicates that the correct answer to the question is $2,636.16 (option c).