The future value of a $2,000 annuity due deposited at 8 percent compounded annually for each of the next 10 years is ________.
A) $28,974
B) $31,291
C) $14,494
D) $13,420

Question

Quizplus · Accepted Answer

The formula for the future value of an annuity due is:
FV = PMT[(1+r)^n - 1]/r*(1+r)
Where:
PMT = Payment per period
r = Interest rate per period
n = Number of periods

In this case, PMT = $2,000, r = 8% per year (or 0.08 per year), and n = 10 years.

To find the future value, we can simply input these values into the formula and solve for FV:
FV = 2,000[(1+0.08)^10 - 1]/0.08*(1+0.08)
FV = $31,290.85

Therefore, the answer is B, $31,291.

The Future Value of a $2,000 Annuity Due Deposited at 8