Answer:
The future value of the annuity due to the nearest cent is $2956.
Step-by-step explanation:
Consider the provided information:
It is provided that monthly payment is $175, interest is 7% and time is 11 years.
The formula for the future value of the annuity due is:
[tex]FV of Annuity Due = (1+r)\times P[\frac{(1+r)^{n}-1}{r}][/tex]
Now, substitute P = 175, r = 0.07 and t = 11 in above formula.
[tex]FV of Annuity Due = (1+0.07)\times 175[\frac{(1+0.07)^{11}-1}{0.07}][/tex]
[tex]FV of Annuity Due = (1.07)\times 175[\frac{1.10485}{0.07}][/tex]
[tex]FV of Annuity Due = 187.5(15.7835)[/tex]
[tex]FV of Annuity Due = 2955.4789[/tex]
Hence, the future value of the annuity due to the nearest cent is $2956.
