Question

Determine the amount of an immediate annuity of N$200 per annum left unpaid for 10 year at 7% p.a compounded interest.

Answer 1

$FV=\frac{P[(1+r)^t-1]}{r}$

Now, substituting the values,

$\Rightarrow FV=\frac{200[(1+0.07)^10-1]}{0.07}$

$\Rightarrow FV= \frac{200(1.07^{10}-1)}{0.07}$

$\Rightarrow FV=2763.28$

Hence the required amount will be $2763.28