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Find the value of annuity if the periodic deposit is $250 at 5% compounded quarterly for 10 years

1 Answer

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Answer:

The value of annuity is
P_v = \$ 7929.9

Explanation:

From the question we are told that

The periodic payment is
P = \$ 250

The interest rate is
r = 5\% = 0.05

Frequency at which it occurs in a year is n = 4 (quarterly )

The number of years is
t = 10 \ years

The value of the annuity is mathematically represented as


P_v = P * [1 - (1 + (r)/(n) )^(-t * n) ] * [((1 + (r)/(n) ))/( (r)/(n) ) ] (reference EDUCBA website)

substituting values


P_v = 250 * [1 - (1 + (0.05)/(4) )^(-10 * 4) ] * [((1 + (0.05)/(4) ))/( (0.08)/(4) ) ]


P_v = 250 * [1 - (1.0125 )^(-40) ] * [((1.0125 ))/(0.0125) ]


P_v = 250 * [0.3916 ] * [((1.0125))/(0.0125) ]


P_v = \$ 7929.9

User Gaurav Thantry
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