Answer:
The total cash value of the annuity at end of year 8 is $44,992.92
Step-by-step explanation:
Lance Rice has decided to invest $1,200 quaterly for 8 years in an ordinary annuity at 4%.
Formula for future value of ordinary annuity
[tex]F_{OA}=A\left [ \frac{\left (1+\frac{r}{n}\right)^{nt}-1}{\frac{r}{n}} \right ][/tex]
where ,
A is investment $1,200
r is rate of interest, 4%
t is time 8 years.
n is number of period per year , n=4
[tex]F_{OA}=1200\left [ \frac{\left (1+\frac{4}{400}\right)^{4\times 8}-1}{\frac{4}{400}} \right ][/tex]
[tex]F_{OA}=44992.92[/tex]
Thus, The total cash value of the annuity at end of year 8 is $44,992.92
