Answered

Lance Rice has decided to invest $1,200 quarterly for 8 years in an ordinary annuity at 4 percent. The total cash value of the annuity at end of year 8 is:



$46,642.80


$44,992.92


$46,246.80


$44,292.92


None of these

Verified Answer :

If you invest $1,200 quarterly for 8 years at 4 percent interest, at the end of 8 years you will have $45997.42

isyllus

Answer:

The total cash value of the annuity at end of year 8 is $44,992.92

Step-by-step explanation:

Lance Rice has decided to invest $1,200 quaterly for 8 years in an ordinary annuity at 4%.

Formula for future value of ordinary annuity

\(F_{OA}=A\left [ \frac{\left (1+\frac{r}{n}\right)^{nt}-1}{\frac{r}{n}} \right ]\)

where ,

A is investment $1,200

r is rate of interest, 4%

t is time 8 years.

n is number of period per year , n=4

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Thus, The total cash value of the annuity at end of year 8 is $44,992.92




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