Lance Rice has decided to invest $1,200 quarterly for eight years in an ordinary annuity at 4%. The total cash value of the annuity at end of year 8 is (use the tables in the handbook) :

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Chad Hawkins

Business

1 May, 15:32

Lance Rice has decided to invest $1,200 quarterly for eight years in an ordinary annuity at 4%. The total cash value of the annuity at end of year 8 is (use the tables in the handbook) :

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Milton Haas · Answer 1

First step is to compute for the interest that is gained from the described investment.

I = P x i x n

where P is the principal amount, i is the interest rate, and n is the number of years.

I = ($1200) x 0.04 x 8 = $384

Then, we add the interest gained to the original amount.

F = P + I = ($1200) + ($384) = $1584

Thus, the amount after 8 years is $1584.