find the value of the anniuty
a1=$5000,I=0.08,n=10
what is the future value of the anniuty
I will assume that 5000 is the "payment" of the annuity
future value = 5000( 1.08^10 - 1)/.08 = 72432.81
To find the future value of an annuity, you can use the formula:
FV = A * (1 + r)^n - 1 / r
Where:
FV = Future value of the annuity
A = Annuity payment (in this case, $5000)
r = Interest rate per compounding period (in this case, 0.08)
n = Number of compounding periods (in this case, 10)
Let's plug in the values into the formula:
FV = 5000 * (1 + 0.08)^10 - 1 / 0.08
To simplify the calculations, let's first compute (1 + 0.08)^10:
(1 + 0.08)^10 = 1.08^10 ≈ 1.8599
Now, we can substitute the value of (1 + 0.08)^10 into the formula:
FV = 5000 * 1.8599 - 1 / 0.08
Next, compute the subtraction and division:
FV = 9299.5 - 1 / 0.08
FV = 9299.5 - 12.5
FV = 9287
Therefore, the future value of the annuity is approximately $9287.