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6 July, 08:46

МАЗА

$50 is invested biweekly in an

ordinary simple annuity, earning

3.5% interest per annum,

compounded biweekly. What will the

value of the annuity be in 10 years?

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Answers (1)
  1. 6 July, 08:52
    0
    The value of the annuity in 10 years will be US$ 15,552.90

    Step-by-step explanation:

    Let's use the ordinary simple annuity formula to calculate the value of the annuity in 10 years, this way:

    FV = Future value of an annuity stream

    PMT = Dollar amount of each annuity payment = US% 50

    r = Interest rate = 3.5% compounded biweekly = 0.035/26

    n = Number of periods in which payments will be made = 26 * 10 = 260

    FV = PMT * [ (1 + r) ⁿ - 1]/r

    Now, replacing with the real values, we have:

    FV = 50 * [ (1 + 0.035/26) ²⁶⁰ - 1] / (0.035/26)

    FV = 50 * [ (1.001346154) ²⁶⁰ - 1]/0.001346154

    FV = 50 * 0.41873217/0.001346154

    FV = 50 * 311.058148

    FV = 15,552.90

    We only rounded the last product to the next cent, in all the other cases we used all the decimals for the calculations.
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