Find the future value of an ordinary annuity of $300 paid quarterly for 2 years, if the interest rate is 15%, compounded quarterly. (Round your answer to the nearest cent.)
Unitary Method
The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.
Speed, Time, and Distance
Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 miles away.
Profit and Loss
The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.
Units and Measurements
Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experiments to set up the devices.
Find the future value of an ordinary annuity of $300 paid quarterly for 2 years, if the interest rate is 15%, compounded quarterly. (Round your answer to the nearest cent.)
Given that in an ordinary annuity, $300 is paid per quarter for 2 years at an interest rate of 15% when compounded quarterly.
We have to calculate the future value of this annuity.
We know that the future value of an ordinary annuity when dollars is paid for n periods with interest rate per period r is given by the formula .
Note that, the compounding period is quarterly.
Hence, one period stands for 1 quarter and there are 4 quarters in a year.
The amount paid per quarter is $300.
The amount is paid for 2 years and 2 years have quarters.
The annual interest rate is 15% and hence the interest rate per quarter = .
Step by step
Solved in 2 steps