The future value of a $10,000 annuity due, deposited at 12 percent compounded annually for each of the next 5 years is ________ .
A) $71,154
B) $36,050
C) $40,376
D) $63,530

Question

Quizplus · Accepted Answer

The future value of an annuity due is calculated using the formula:FV = P * [(1 + r)^n - 1] / r * (1 + r)where:P is the payment amountr is the interest raten is the number of periodsIn this case, we have:P = $10,000r = 12% = 0.12n = 5Plugging these values into the formula, we get:FV = $10,000 * [(1 + 0.12)^5 - 1] / 0.12 * (1 + 0.12)= $10,000 * [1.76234 - 1] / 0.12 * 1.12= $10,000 * 0.76234 / 0.1344= $71,154.02Therefore, the future value of the annuity due is $71,154.02.

The Future Value of a $10,000 Annuity Due, Deposited at 12