Assume you are to receive a 20-year annuity with annual payments of $50.The first payment will be received at the end of Year 1,and the last payment will be received at the end of Year 20.You will invest each payment in an account that pays 10%.What will be the value in your account at the end of Year 30?
A) $6,354.81
B) $7,427.83
C) $7,922.33
D) $8,591.00
E) $6,752.46

Question

Quizplus · Accepted Answer

Step 1 - Calculate the future value for the first 20 years. FV = PMT × 11ea7fdb_fc14_376c_a768_9162c18dc380_TB2902_11 FV = 50 × 11ea7fdb_fc14_5e7d_a768_9b4531329c6d_TB2902_11 = $2,863.75 Using a financial calculator: N = 20, I/Y = 10, PV = 0, PMT = -50, cpt FV = $2,863.75 Step 2 - Grow that future value another 10 years to arrive at the value at year 30. FV = PV × 11ea7fdb_fc14_5e7e_a768_6bfc080cda05_TB2902_11 FV = 2,863.75 × (1.10)¹⁰ = $7,427.83

Assume You Are to Receive a 20-Year Annuity with Annual