Answer:
$5,881.63
Step-by-step explanation:
The future value of an annuity is given by the formula:
[tex]FV=PV[\frac{(1+i)^n-1}{i}][/tex]
Where
FV is future value
PV is present value
i is interest rate
n is the time period
The future value of annuity DUE is given by the formula:
[tex]FV_d=PV[\frac{(1+i)^n-1}{i}](1+i)[/tex]
Where
[tex]FV_d[/tex] signifies annuity due, and all other variables same
Hence we can see that the future value of annuity due has an extra multiplicative factor of (1+i) with future value of normal annuity. Since the problem tells us the FV of normal annuity is 5575, we simply multiply this by (1+i)=(1+0.055)=1.055 to get future value of annuity due.
Hence, 5575 * 1.055 = $5,881.63 (rounded to 2 decimals)
