Find the future value of an ordinary annuity if payments are

Find the future value of an ordinary annuity if payments are made in the amount R and interest is compounded as given. Then determine how much of this value is from contributions and how much is from interest. Rs 14,000 4 2% interest compounded quarterly for 9 years The future value of the ordinary annuity is S

Solution

The formula for future value is given by :

P = PMT[((1+r)ⁿ-1)/r]

PMT = 14,000, n = 9(4)=36, r = .042

Hence P = 14000[((1+.042)³⁶-1)/.042]

=> P = 14000[((1.042)³⁶-1)/.042]

=> P = 14000(80.900) = 1,132,608.1

=> P = 149,378.800