Question 1 1 point D What is the accumulated sum of the foll

Question 1 (1 point) D What is the accumulated sum of the following stream of payments? $27,361 every year at the beginning of the year for 8 years, at 4.38 percent, compounded annually Round the answer to two decimal places

Solution

since the payment is made at the beggining of the period:

the stream of payments can be called annuity immediate.

the future value of annuity immediate = (1+r) + P [1 - (1+r)^(n) - 1] /r

here,

P = $27,361

r = 4.38% =>0.0438.

n =8 years.

now,

(1+0.438) *$27,361 *[(1.0438)^8 - 1] / 0.0438

=>1.0438*$27,361*9.33992534

=>$266,742.77.