math

what is the future value of an ordinary annuity of $12,000 per year,for three years at9% interest compounded annually?

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  1. To find out what your investment would be in 3 years, you must find the interest for year one and add it to the principle to find the interest for year two and so on. Which means your interest earns interest for you.
    Principle x Rate=Interest

    Year 1: 12,000 x .09 =1080
    Year 2: 13,080 X .09 =1177.20
    Year 3: 14,257 C .09 =1283.14

    Now add up the interest
    1080+ 1177.20+ 1283.14=3540.34

    To find the Future Value add the interest plus your initial investment. 3540.34+ 12,000= $15,540.34

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  2. future amount = 12000(1.09^3
    =15540.35

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  3. interest=principle*rate*time
    i=12000*.09*1
    begin each year by adding both interest from end of last year plus new annuity payment= to principle
    12000 end of first period
    25080 end of second period
    39337.2 end of third period
    39337.2=future value

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