##### Homework help needed

label Accounting
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schedule 1 Day
account_balance_wallet \$5

Peter will receive \$1200 at the beginning of each of the next 7 years. What is the future value of this annuity, assuming the interest rate is 9% compounded annually? ( Round to the nearest whole dollar)

Jun 23rd, 2015

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Jun 23rd, 2015

The future value of 7 annual receipts of \$1,200.00, received at the end of each period, and earning an annual interest rate of 9.000%, would be \$11,040.52 -- of which \$8,400.00 is the total of the receipts and \$2,640.52 is the total interest earnings.

Please note that the \$2,640.52 also represents the financial opportunity cost of spending \$1,200.00 per year for 7 years on non-essential expenditures that lose their value with time and/or use.

 Year Receipts Interest Balance 1 \$1,200.00 \$0.00 \$1,200.00 2 \$1,200.00 \$108.00 \$2,508.00 3 \$1,200.00 \$225.72 \$3,933.72 4 \$1,200.00 \$354.03 \$5,487.75 5 \$1,200.00 \$493.90 \$7,181.65 6 \$1,200.00 \$646.35 \$9,028.00 7 \$1,200.00 \$812.52 \$11,040.52 Totals \$8,400.00 \$2,640.52 \$11,040.52
FV = 11040.52

Jun 23rd, 2015

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Jun 23rd, 2015
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Jun 23rd, 2015
Oct 23rd, 2017
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