What is the future value of a stream of $800 annual payments worth to the investor at the end of 10 years if these payments are invested at an annual rate of return of 8.5%?
A)$11,868.08
B)$12,195.22
C)$13,334.90
D)$13,667.88

Question

Quizplus · Accepted Answer

The future value of a stream of annual payments can be calculated using the formula:FV = PMT * [(1 + r)^n - 1] / rwhere:PMT is the annual paymentr is the annual rate of returnn is the number of yearsIn this case, the annual payment is $800, the annual rate of return is 8.5%, and the number of years is 10. Plugging these values into the formula, we get:FV = 800 * [(1 + 0.085)^10 - 1] / 0.085= 800 * [1.99254 - 1] / 0.085= 800 * 0.99254 / 0.085= $11,868.08Therefore, the future value of the stream of annual payments is $11,868.08.

What Is the Future Value of a Stream of $800