The future value of an annuity of $100 at 8 percent for ten years exceeds $1,000.

Question

Quizplus · Accepted Answer

The future value of an annuity is calculated using the formula:
FV = PMT x [(1 + r)^n - 1]/r 
where PMT is the periodic payment (in this case $100), r is the interest rate (8%), and n is the number of periods (10 years).

Plugging in the values, we get:
FV = $100 x [(1 + 0.08)^10 - 1]/0.08 
FV = $1,469.10

Therefore, the future value of the annuity of $100 at 8 percent for ten years is greater than $1,000. So the statement is true, and the answer is A.

The Future Value of an Annuity of $100 at 8