Please help me find the value of the annuity for the following:
a1= $8000, I=0.06, n=10
$8,000 invested for 10 years at 8% compounded annually$8,000 invested for 10 years at 0.06%
n = 10
Thank you.
A = p(1+ r)^n
A = 8000(1 + 0.06%)^10
Annuities imply that there are periodic payments.
Do you want the present value of an annuity of $8000?
I will assume that.
PV = 8000( 1 - 1.06^-10)/.06
= $58,880.07
To find the value of an annuity, we can use the formula:
V = a * [(1 + r)^n - 1] / r,
where:
V is the value of the annuity,
a is the annual payment,
r is the interest rate per period, and
n is the number of periods.
In this case, a = $8,000, r = 0.06, and n = 10. Plugging these values into the formula, we have:
V = $8,000 * [(1 + 0.06)^10 - 1] / 0.06.
Calculating further:
V = $8,000 * [1.790847 - 1] / 0.06
V = $8,000 * 0.790847 / 0.06
V = $105,456.16.
Therefore, the value of the annuity is approximately $105,456.16.