Question

What is the future value of 24 periodic payments of $5,070 each made at the beginning of each period and compounded at 8%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Answer 1

Future Value= $365,577.12

Step-by-step explanation:

Giving the following information:

n= 24 years

i= 8%

Annual payments= $5,070

Because the payments are made at the beginning of the year, we need to include an additional interest period. We will use the following formula:

FV= {A*[(1+i)^n-1]}/i + {[A*(1+i)^n]-A}

FV= {5,070*[(1.08^24)-1]} / 0.08 + {[5,070* (1.08^24)] - 5,070}

FV= 338,497.33 + 27,079.79

FV= $365,577.12