Use the formula A = (P[((1 + r)) with superscript (t) - 1]/r) or A = (P[((1 + (r/n))) with superscript (nt) - 1]/(r/n)) to find the value of the annuity.

Question

Use the formula A =  or A =  to find the value of the annuity.

Answer 1

$100 deposited annually

4% compounded annually for 7 years

future value =100(1.04^7 -1)/.04 = $789.83

and

in 7 years, $700 is deposited

0 in year 0

100 in one year

104+100=204 in year 2

100+212= 312 in 3

100+325=425 in 4

100+442= 542 in 5

100+563=663 in 6

100+689.83

=$789.83

= future value of $100 deposited annually at 4% compounded annually for 7 years

earning $89.83 interest