What is the future value of an ordinary annuity consisting of 10 annual payments of $100 with an interest rate of 10% p.a.compounded weekly?
A)$1,593.70
B)$1,632.97
C)$1,457.90
D)$1,873.23

Question

Quizplus · Accepted Answer

First, we need to calculate the effective interest rate per period, which in this case would be the weekly interest rate. Using the formula: 
(1 + i/m)^m - 1
Where i is the annual interest rate (10%) and m is the number of times per year that interest is compounded (52 weeks), we get:
(1 + 0.10/52)^52 - 1
= 0.1047 or 10.47%

Next, we can use the formula for the future value of an ordinary annuity:
FV = PMT x (((1 + r)^n - 1) / r)
Where PMT is the annual payment ($100), r is the effective interest rate per period (10.47%/52), and n is the total number of periods (10 years x 52 weeks per year = 520 periods).

Plugging in the numbers, we get:
FV = 100 x (((1 + 0.1047/52)^520 - 1) / (0.1047/52))
= $1,632.97

Therefore, the best choice is B.

What Is the Future Value of an Ordinary Annuity Consisting