Find the value of the following annuity. - $275 is deposited at the end of each

Question

Find the value of the following annuity. - $275 is deposited at the end of each quarter for 3years; the interest rate is 9.5% compounded quarterly. Annuities are killing me...I think I use the formulaS=R[(1+r/m)^t*m - 1/r/m] - Can somebody walk me through thesolution so I can get this straight? - $275 is deposited at the end of each quarter for 3years; the interest rate is 9.5% compounded quarterly. Annuities are killing me...I think I use the formulaS=R[(1+r/m)^t*m - 1/r/m] - Can somebody walk me through thesolution so I can get this straight? Annuities are killing me...I think I use the formulaS=R[(1+r/m)^t*m - 1/r/m] - Can somebody walk me through thesolution so I can get this straight?

Explanation / Answer

For annuity case here... N=3 Yrs, Int rate = 9.5%, PMT = $275. m= 4periods (Qtryly Interest) FV = PMT*[(1+int/m)^(m*N) - 1]/(Int/m) FV of annuity = PMT*[(1+Int/4)^(4*N)-1]/(Int/4) =275*[(1+9.5%/4)^(4*3)-1]/(9.5%/4) ie FV = 275*[1.02375^12 - 1]/0.02375 = 275*0.3253/0.02375 =$3767.08 So Future Value of Annuity after 3 yrs will be $3767.08

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