Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
B- In order to fund his son’s higher education, Abdullah decided to invest $1000 quarterly for 6 years in an ordinary annuity at 12%
B- In order to fund his son’s higher education, Abdullah decided to invest $1000 quarterly for 6 years in an ordinary annuity at 12%. What is the total cash value of the annuity at end of year 6?
Expert Solution
Annuity Amount = $1,000
Interest rate = 12% annually
quarterly interest rate, i = 12/4 = 3% = 3/100 = 0.03
time period = 6 years
number of annuity, n = 6 x 4 = 24
Future value of annuity (total cash value)
= Annuity x [(1 + i)n - 1] / i
= 1,000 x [(1 + 0.03)24 - 1] / 0.03
= 1,000 x [(1.03)24 - 1] / 0.03
= 1,000 x (2.03279411 - 1) / 0.03
= 1000 x 1.03279411 / 0.03
= 1,000 x 34.4264703
= 34,426.4703 approx
or $34,426 (rounded off)
Total cash value of the annuity at end of 6 years = $34,426
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
