Question

Jiefel has a 20 year annuity due making annual payments that grow geometrically at the rate 1.500%. The first

payment is $1250.00 and the interest rate is i(2) 8.500%$. What is the future value of her annuity?
a. Q= $70,780.221
b. Q=$70,035.17
c. Q= $68,545.06
d. Q= $75,250.55
e. Q=$74,505.50

Answer 1

The future value of the annuity is $70,035.17.

Step-by-step explanation:

To find the future value of the annuity, we can use the formula:

Future Value = Payment * (1 + Interest rate)Number of years

In this case, the first payment is $1250.00 and the interest rate is 8.500%. The payments are growing geometrically at a rate of 1.500%. The annuity is for 20 years. Plugging these values into the formula:

Future Value = $1250.00 * (1.08500) * (1.01500)20

Simplifying the calculation gives us the answer option B: Q = $70,035.17.