Periodic deposit 4000 at end of year 4% compounded annually 25 years what is the value of the annuity
To calculate the value of the annuity, we can use the formula for the future value of an annuity:
FV = P * [(1 + r)^n - 1] / r
Where:
FV = Future Value of the annuity
P = Periodic deposit (4000)
r = Annual interest rate (4% or 0.04)
n = Number of periods (25 years)
Plugging in the values:
FV = 4000 * [(1 + 0.04)^25 - 1] / 0.04
FV = 4000 * [(1.04)^25 - 1] / 0.04
FV = 4000 * [2.65329771 - 1] / 0.04
FV = 4000 * 1.65329771 / 0.04
FV = 1653.29771 * 100
FV = $165,329.77
Therefore, the value of the annuity after 25 years will be $165,329.77.