Future Value of an Annuity Due If the future value of an ordinary, 7-year annuity is $10,000 and interest rates are 4 percent, what's the future value of the same annuity due?
A) $9,615.38
B) $10,000.00
C) $10,400.00
D) $10,700.00

Question

Quizplus · Accepted Answer

To find the future value of an annuity due, we need to multiply the future value of the ordinary annuity by (1 + i), where i is the interest rate per year.

In this case, the future value of the ordinary annuity is $10,000, and the interest rate is 4 percent or 0.04 per year.

So, the future value of the annuity due would be: 
$10,000 x (1 + 0.04) = $10,400

Therefore, the answer is choice C.

Future Value of an Annuity Due If the Future Value