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The future value of a $10,000 annuity due deposited at 12 percent compounded annually for each of the next 5 years is ________.

Respuesta :

The answer to the question above is $17,623.41 ( Calculation: 17,623.41 = 10,000*(1+0.12)^5) based on the information shown on the question above. This problem can be solved using the future value formula which stated as FV = PV*(1+i)^n. In this formula, FV is the future value, PV is the present value, i is the interest rate, and n is the period of investing activity.
CastleRook
This is the concept of time value of money, the question requires us to find the future value of an amount which is deposited yearly, also called annuity. At a rate of 12% per year in 5 years. To get the future amount we use the formula;
A=P(1+r/100)^n
where;
A=future amount
P=principle (current amount)
r=rate
n=time
Thus substituting our values we obtain;
A=10000(1+12/100)^5
A=10000(1.12)^5
A=17,623.42
Therefore we conclude that after 5 years the amount will have compounded to $17,623.42

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