Question

Find the value of the ordinary annuity at the end of the indicated time period. The payment​ R, frequency of deposits m​ (which is the same as the frequency of​ compounding), annual interest rate​ r, and time period t are given.
amount ​1,000​; quarterly​; 6.2%, five years

How do I solve this?

First I took r/m=.062/4=.0155

Then I took T=5 years and times it by 4 (compound quarterly) =20

Then I entered

1000(1+.0155/4)^20-1/(.0155)

What do I do from here?

Thanks!

Answer 1

1000(1+.0155/4)^20-1/(.0155)
careful with brackets, secondly you already did .062/4 , so why are you dividing .0155 by 4 ??


amount = 1000 ( 1.0155^20 - 1)/.0155
= 1000( 23.237857...)
= $ 23237.86