Answer to Question #199587 in Financial Math for mithi

Question

a philantrophist wishes to donate an amount to an orphanage. The amount will provide 15,000php a year to support a child for 8 years. If money is invested at 10% compounded annually, how much should he donate?

Answer 1

The formula for the future value of an ordinary annuity is:

$FV = P×((1 + i)^n - 1)/i = 15,000×((1 + 0.1)^8 - 1)/0.1 = 171,538.32.$