Question

Find the amount (future value) of each ordinary annuity. $1000/year for 10 years at a 5% compounded annually.

Answer 1

The future value is calculated as,

$FV=P(1+\frac{r}{n})^{Yn}$

Here, P= $1000

Y= 10

r=5%=5/100

n=1 (since compounded annually)

So,

$FV=1000(1+\frac{5}{100})^{10}=1628.89$