SOLUTION: Find the future value of an ordinary annuity of $800 paid quarterly for 4 years, if the interest rate is 12%, compounded quarterly. (Round your answer to the nearest cent.)

Question 1088950: Find the future value of an ordinary annuity of $800 paid quarterly for 4 years, if the interest rate is 12%, compounded quarterly. (Round your answer to the nearest cent.)
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
annuity is 800 every quarter.
time periods are quarters
4 years * 4 time periods a year = 16 time periods.
interest rate percent of 12% per year / 4 = 3% per quarterly time period.
you want the future value of the annuity.

the following time value of money calculator will do it for you.

https://arachnoid.com/finance/.

inputs are:

present value = 0
future value = 0
number of periods = 16
payment amount = 800
interest rate per period % = 3
select payment at end of time period

click on FV and the calculator tells you that the future value of the annuity is equal to -16,125.5

if you had entered the payment as negative, then the future value would have been positive.

your solution is that the future value of the annuity is $16,125.5

here's a picture of the results of the use of the calculator.

$$$

if you want to calculate it manually, use the following formula.

FUTURE VALUE OF AN ANNUITY WITH END OF TIME PERIOD PAYMENTS
f = (a*((1+r)^n-1))/r
f is the future value of the annuity.
a is the annuity.
r is the interest rate per time period.
n is the number of time periods

make sure to use the parentheses exactly as shown, otherwise you won't get the right answer.

a = 800
r = .03 (rate = rate percent divided by 100)
n = 12

you will get a future value of $16,125.5

this agrees with the calculator results.

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