Question

What is the future value of the following annuity? # of periods = 10 Interest rate = 5.25% Compounding times per period = 12 Cash flow (PMT) = 1000 Growth Rate = 3% # of payments per period = 12 This is an ordinary annuity

Answer 1

	A/c balance after 10 years	P×[(1+r)^n-(1+g)^n]÷(r-g)
	Here,
1	Interest rate per annum	5.25%
2	Number of years	10
3	Number of compoundings per per annum	12
4 = 1÷3	Interest rate per period ( r)	0.44%
5 = 2×3	Number of periods (n)	120
	Growth rate (g)	3.00%
	First payment (P)	$                                                                         1,000
	A/c balance after 10 years	$                   1,288,681.48
		1000×((1+0.44%)^120-(1+3%)^120)÷(0.44%-3%)