High School

What is the future value of a 5 year annuity due that pays $2,800 every month if the appropriate interest rate is 4.3% compounded monthly? $285,395.61

$187,725.01

$187,054.73

$24,234.59

Answer :

The future value of the annuity due is $187,054.73.

To calculate the future value of an annuity due, we can use the formula:

FV = P * [(1 + r)^n - 1] / r

Where:

FV = Future value of the annuity

P = Payment amount per period

r = Interest rate per period

n = Number of periods

In this case, the payment amount per period is $2,800, the interest rate is 4.3% per year (or approximately 0.3583% per month), and the annuity lasts for 5 years (60 months).

Plugging these values into the formula, we have:

FV = 2800 * [(1 + 0.003583)^60 - 1] / 0.003583

Evaluating this expression, the future value of the annuity due is approximately $187,054.73.

Therefore, the correct answer is $187,054.73.

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