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What is the future value (at the end of 4 years) of an annuity that pays $4300 a quarter over 4 years with the payments invested at 9.4% per annum (assume compounding matches payment periods, common assumption for such problems)

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facundobuzzetti

Answer:

FV= $82,363.37

Explanation:

Giving the following information:

Cash flow= $4,300

number of periods (n)= 4*4= 16

i= 0.094/4= 0.0235

To calculate the future value, we need to use the following formula:

FV= {A*[(1+i)^n-1]}/i

A= cash flow

FV= {4,300*[(1.0235^16) - 1]} / 0.0235

FV= $82,363.37

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