The formula for future annuity is given by:
FV=P[(1+r)^n-1]/r
where:
FV-future value
P=principle
r=rate
n=time
thus given that:
p=$600, n=12 years, r=8%
The future value annuity of this amount will be:
FV=600[(1+0.08)^12-1]/0.08
simplifying the above we get:
FV=$11,386.28
Thus the present value of this amount will be calculated using compounding formula:
A=P(1+r)^n
the terms are defined as above
thus plugging our values and solving for P we get
11386.28=P(1+0.08)^12
simplifying this we get:
P=$4521.65
Hence the present value of this annuity is $4521.65
