What is the future value of an ordinary annuity of ₱38,000 per year, for 7 years, at 8% interest compounded annually?

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03-11-2022
Mathematics

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What is the future value of an ordinary annuity of ₱38,000 per year, for 7 years, at 8% interest compounded annually?

Sagot :

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YahayraE436311idn YahayraE436311idn · Answer 1 · 2022-11-03T07:44:50-04:00

Annuities

The future value (FV) of an annuity is given by:

[tex]FV=A\cdot\frac{(1+i)^n-1}{i}[/tex]

Where:

A is the value of the annuity or the regular payment

i is the interest rate adjusted to the compounding period

n is the number of periods of the investment (or payment)

The given values are:

A = $38,000

n = 7 years

i = 8% = 0.08

Substituting:

[tex]\begin{gathered} FV=\$38,000\cdot\frac{(1+0.08)^7-1}{0.08} \\ FV=\$38,000\cdot\frac{(1.08)^7-1}{0.08} \\ \text{Calculate:} \\ FV=\$38,000\cdot\frac{0.7138243}{0.08} \\ FV=\$38,000\cdot8.9228 \\ FV=\$339,066.53 \end{gathered}[/tex]

The future value is $339,066.53

Sagot :

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