Explanation:
To calculate the future value of an ordinary due annuity, we can use the formula for the future value of an ordinary annuity:
Future Value = Payment × [(1 + r)^n - 1] / r
Where:
Payment = Amount paid at the end of each period (Nu.200 in this case)
r = Interest rate per period (monthly rate in this case)
n = Number of periods (number of months in this case)
Given:
Payment = Nu.200
Interest rate = 3.5% per year
Number of years = 4
To calculate the monthly interest rate, we divide the annual interest rate by 12 (number of months in a year):
Monthly interest rate = (3.5% / 100) / 12 = 0.002917 (approximately)
To calculate the number of periods, we multiply the number of years by 12 (number of months in a year):
Number of periods = 4 years × 12 months/year = 48
Now, we can plug these values into the formula to calculate the future value:
Future Value = Nu.200 × [(1 + 0.002917)^48 - 1] / 0.002917
Calculating this expression will give us the future value of the annuity.
Future Value ≈ Nu.200 × [1.17768 - 1] / 0.002917
Future Value ≈ Nu.200 × 0.17768 / 0.002917
Future Value ≈ Nu.200 × 60.907
Therefore, the future value of this ordinary due annuity is approximately Nu.12,181.40.