Find the future value of the following ordinary simple annuity

Finance Dec 25, 2020

Find the future value of the following ordinary simple annuity. Periodic Payment Payment Interval Term Interest Rate $497.00 3 months 9.75 years 7% Conversion Period quarterly The future value is $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)

Expert Solution

Quarterly rate = 7% / 4 = 1.75%

Number of periods = 9.75 * 4 = 39

Future value = Payment * [(1 + rate)^periods - 1] / rate

Future value = 497 * [(1 + 0.0175)^39 - 1] / 0.0175

Future value = 497 * [1.96717 - 1] / 0.0175

Future value = 497 * 55.26696

Future value = $27,467.68

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