Use the ordinary annuity formula to determine the accumulated amount in the annuity. Round to the nearest cent.
$1000 invested annually for 10 years at 9 % interest compounded annually
We can use the formula for the future value of an ordinary annuity:
FV = PMT * [((1+r)^n - 1) / r]
where:
PMT = the periodic payment
r = the interest rate per period
n = the number of periods
In this case, PMT = $1000 (the annual payment), r = 0.09 (9% per year, compounded annually), and n = 10 (the number of years).
Plugging in these values, we get:
FV = $1000 * [((1+0.09)^10 - 1) / 0.09] ≈ $16,386.45
Therefore, the accumulated amount in the annuity is approximately $16,386.45.
To find the accumulated amount in an annuity using the ordinary annuity formula, you can use the formula:
A = P * ((1 + r)^n - 1) / r
Where:
A is the accumulated amount
P is the periodic payment
r is the interest rate per period
n is the number of periods
In this case, the periodic payment (P) is $1000, the interest rate (r) is 9% (or 0.09), and the number of periods (n) is 10 years.
Plugging these values into the formula, we get:
A = 1000 * ((1 + 0.09)^10 - 1) / 0.09
Calculating this expression, we find:
A ≈ $14,069.41
Therefore, the accumulated amount in the annuity is approximately $14,069.41.