The future value is $ (Round to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

Transcribed Image Text:Find the future value of an ordinary annuity of $700 paid at the end of each year for 4 years, if interest is
earned at a rate of 6%, compounded annual.
The future value is $
(Round to 2 decimal places.)
Expert Solution

Step 1
interest rate =6%
Period =4 years
Future value FACTOR =(1+r)n-1/r
Future value FACTOR =(1.06)4-1/0.06
Future value FACTOR =4.374
Future value =Future value FACTOR x annual payment
Future value =4.374 ×700
Future value =$3061.80
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