Use the ordinary annuity formula to determine the accumulated amount in the annuity. Round the answer to the nearest cent.
-$1700 is invested semiannually for 4 years at 4.3% compounded semiannually
A) $31,665.24
B) $14,668.61
C) $54,203.49
D) $61,537.80

Question

Quizplus · Accepted Answer

The formula for the future value of an ordinary annuity is $A = P \frac{(1 + r)^n - 1}{r}$, where $A$ is the future value of the annuity, $P$ is the payment amount per period, $r$ is the interest rate per period, and $n$ is the total number of payments. Given that $1700 is invested semiannually for 4 years at an annual interest rate of 4.3% compounded semiannually, we calculate $r = 0.043/2 = 0.0215$ and $n = 4 \times 2 = 8$. Plugging these values into the formula gives $A = 1700 \frac{(1 + 0.0215)^8 - 1}{0.0215}$, which calculates to approximately $14,668.61.

Use the Ordinary Annuity Formula to Determine the Accumulated Amount