Asked by Taryn
________ is the amount of a $3,000.00 annuity due at 12 percent compounded semiannually for 3 years.
A. $334,321.00
B. $43,068.93
C. $22,180.50
D. $41,814.50
A. $334,321.00
B. $43,068.93
C. $22,180.50
D. $41,814.50
Answers
Answered by
mathhelper
Annuity "due" implies that the payment is made at the end of the interest period instead of the usual end of the period.
so , assuming there are 6 payments of $3000, each made at the beginning of the period. (the wording of the question could be improved)
Amount = 3000( 1.06^6 - 1)/.06 * 1.06 = 22,181.51
Lay out a time-graph to understand why I am multiplying by the extra 1.06
(I don't understand why their answer is off by a whole dollar, none of the
other three answers come remotely close to make any sense)
so , assuming there are 6 payments of $3000, each made at the beginning of the period. (the wording of the question could be improved)
Amount = 3000( 1.06^6 - 1)/.06 * 1.06 = 22,181.51
Lay out a time-graph to understand why I am multiplying by the extra 1.06
(I don't understand why their answer is off by a whole dollar, none of the
other three answers come remotely close to make any sense)
Answered by
Taryn
Thank you! I was very confused.
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