Question

find the value of the ordinary annuity at the end of the indicated time period. The payment R, frequency of deposits m, annual interest rate r, and the period t are given. Amount $600; compounded quarterly; 6.5% interest rate, 8 yearsthe value of the ordinary annuity is $______ (round to nearest cent)

Answer 1

Given the formula for the Amount as;

$\begin{gathered} A=R\frac{(1+\frac{r}{m})^n-1}{\frac{r}{m}} \\ \text{Where }n=mt \\ R=600 \\ r=6.5\text{ \%=0.065} \\ m=4 \\ t=8 \end{gathered}$$\begin{gathered} A=600\frac{(1+\frac{0.065}{4})^{32}-1}{\frac{0.065}{4}} \\ A=600\frac{0.6750}{0.01625} \\ A=600(41.54) \\ A=24923.08 \end{gathered}$

The value of the ordinary annuity is $24923.08