The future value of a $2,000 annuity due deposited at 8 percent compounded annually for each of the next 10 years is ________.
A)$28,973
B)$31,291
C)$14,494
D)$13,420

Question

Quizplus · Accepted Answer

Using the formula for future value of an annuity due, we get:

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

where PMT is the payment made at the beginning of each year, r is the interest rate, and n is the number of years.

Substituting the given values, we get:

FV = $2,000 x ((1 + 0.08)^(10+1) -1)/ 0.08
FV = $31,291

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

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