Question

Find the amount (future value) of the ordinary annuity. (Round your answer to the nearest cent.)

$300/week for 9 1/2
years at 5.5%/year compounded weekly

Answer 1

Answer: $227,226.51

Explanation:

First, we need to convert the period to weeks.

9 1/2 years = 9.5 years

1 year = 52 weeks

9.5 years = 494 weeks

Next, we can use the formula for the future value of an annuity:

FV = (PMT x (((1 + r/n)^(n*t)) - 1)) / (r/n)

where:

PMT = payment amount per period

r = annual interest rate

n = number of compounding periods per year

t = number of years

Plugging in the given values:

PMT = $300

r = 0.055 (5.5% expressed as a decimal)

n = 52 (compounded weekly)

t = 9.5 years = 494 weeks

FV = ($300 x (((1 + 0.055/52)^(52*494)) - 1)) / (0.055/52)

FV = $227,226.51

Therefore, the future value of the annuity is approximately $227,226.51.