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27 November, 02:17

What is the value of an annuity due at the end of 15 years of quarterly deposits of $2,000.00 with terms of 8 percent compounded quarterly? $228,102.00 $228,120.00 $232,665.14 $232,666.08

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  1. 27 November, 05:27
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    Explanations:

    The formula for future value given

    deposit amount, A = 2000

    deposit interest, i = 8% annually = 8/4 = 2%, compounded quarterly

    compounding period = quarterly

    number of periods, n = 15 years = 4*15 = 60 periods (quarters)

    The future value is given by:

    FV = A * ((1+i) ^n-1) / i

    = 2000 * (1.02^60/0.02)

    = $228103.08 (rounded to the nearest cent).

    The difference in the answer choice is probably due to the teacher's calculator does not have sufficient accuracy.
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