The future value of an ordinary annuity of $2,000 each year for 10 years,deposited at 12 percent,is ________.
A)$35,097
B)$12,656
C)$39,309
D)$11,300

Question

Quizplus · Accepted Answer

The future value of an ordinary annuity is the sum of the present values of each of the annuity payments. The present value of each payment is the payment amount divided by (1 + r)^n, where r is the interest rate and n is the number of years. In this case, the present value of each payment is $2,000 / (1 + 0.12)^10 = $1,130.00. The future value of the annuity is the sum of the present values of each of the payments, which is $1,130.00 * 10 = $11,300.00.

The Future Value of an Ordinary Annuity of $2,000 Each