What is the future value in year thirty-five of an ordinary annuity cash flow of $4,000 per year at an interest rate of 11.0% per year?
A)$1,366,358.22
B)$555,000.32
C)$196,694.12
D)$140,000.00

Question

Quizplus · Accepted Answer

We can use the formula for the future value of an annuity:

FV = PMT x [(1 + r)^n - 1] / r

Where PMT is the annual payment, r is the interest rate, and n is the number of periods.

Plugging in the given values, we get:

FV = 4,000 x [(1 + 0.11)^35 - 1] / 0.11

FV ≈ $1,366,358.22

Therefore, the best choice is A.

What Is the Future Value in Year Thirty-Five of an Ordinary