Find the future value of an ordinary annuity of $9,000 paid quarterly for 6 years, if the interest rate is 8%, compounded quarterly. (Round your answer to the nearest cent.)
Unitary Method
The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.
Speed, Time, and Distance
Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 miles away.
Profit and Loss
The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.
Units and Measurements
Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experiments to set up the devices.
![**Problem Statement:**
Find the future value of an ordinary annuity of $9,000 paid quarterly for 6 years, if the interest rate is 8%, compounded quarterly. (Round your answer to the nearest cent.)
**Input Field:**
There is a blank field provided for input.
**Explanation:**
This problem involves calculating the future value of an ordinary annuity. The key components to note include:
- **Payment Amount (PMT):** $9,000
- **Payment Frequency:** Quarterly
- **Time Period:** 6 years
- **Interest Rate:** 8% per annum
- **Compounding Frequency:** Quarterly
The future value of an ordinary annuity can be calculated using the formula:
\[ FV = PMT \times \left( \frac{(1 + r)^n - 1}{r} \right) \]
Where:
- \( FV \) is the future value of the annuity.
- \( PMT \) is the periodic payment amount.
- \( r \) is the interest rate per period (annual interest rate divided by the number of compounding periods per year).
- \( n \) is the total number of payments (years multiplied by the number of payments per year).
For this problem:
- \( r = \frac{8\%}{4} = 2\% = 0.02 \)
- \( n = 6 \times 4 = 24 \)
The answer should be rounded to the nearest cent and entered in the provided input field.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb0cd9a6a-5386-486e-8bfb-9bcd65a34f01%2F07dbd993-361f-4a96-8505-41565e829ba6%2Fvfmcevr_processed.png&w=3840&q=75)
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