The future value three years from today of a $200 three-year annuity due compounded at a rate of 10% is equal to ________.
A)$600.00
B)$662.00
C)$728.20
D)$266.20

Question

Quizplus · Accepted Answer

The formula for the future value of an annuity due is:

FV = PMT x [(1 + r)^(n+1) - 1] / r

where PMT is the payment, r is the interest rate, and n is the number of periods.

In this case, PMT = $200, r = 10%, and n = 3. Plugging these values into the formula, we get:

FV = $200 x [(1 + 0.10)^(3+1) - 1] / 0.10
   = $200 x [1.4641 - 1] / 0.10
   = $728.20

Therefore, the future value of the annuity due is $728.20, so the best choice is C.

The Future Value Three Years from Today of a $200