If the interest rate is 7.4% per annum,compounding quarterly,what is the future value of a six-year ordinary annuity with quarterly payments of $4000?
A) $28 903.12
B) $85 938.40
C) $62 647.89
D) $103 126.09

Question

Quizplus · Accepted Answer

The future value of an ordinary annuity can be calculated using the formula: FV = Pmt * [(1 + r)^nt - 1] / r, where Pmt is the payment amount, r is the interest rate per period, and nt is the total number of periods. Here, r = 7.4%/4 = 0.0185, nt = 6*4 = 24. Plugging in the values, the future value is approximately $103,126.09.

If the Interest Rate Is 7