Question

What is the future value of 25 periodic payments of $4,490 each made at the beginning of each period and compounded at 8%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) The future value $enter the future value in dollars rounded to 0 decimal places

Answer 1

Answer:

The answer is $13470.

Explanation:

Assuming that the interest rate is compounded per year at a rate of 8% for an initial value of $4490, over a period of 25 years.

Using the interest formula of $I = P.r.t$ where $P$ is the principal amount which is $4490, $r$ is the interest rate, 8%, and $t$ is the time involved, 25 years.

The results is found as $I = 4490.0,08.25 = 8980$ dollars.

The future value is the amount of interest added to the initial value which comes up to $13470.

I hope this answer helps.

Answer 2

Given Information:  

Number of payments = n = 25

Interest rate = r = 8%

Periodic payment = $4,490

Required Information:  

Future Value = ?  

Answer:  

Future Value = $354,505

Explanation:

The future value is found using the equation

FV = Periodic payment * [ ( (1 + r)ⁿ - 1) / r] * (1 + r)

We have n = 25, r = 0.08 and periodic payment $4,490

FV = $4,490 * [ ( (1 + 0.08)²⁵ - 1) / 0.08] * (1 + 0.08)

FV = $4,490 * [73.1059] * (1.08)

FV = $4,490*78.9543

FV = $354,505

Therefore, the future value of 25 periodic payments of $4,490 compounded at 8% is $354,505