Answer:
Future value = $92,267
Explanation:
An annuity is a series of annual equal payments or receipts occurring for a certain of number of years.
If the cash flow occurs at the beginning and the end of the period in question, it is an ordinary annuity and annuity due respectively.
To calculate the future value of an annuity due as given in the question, we follow these steps:
Step 1
Calculate the Future of an ordinary annuity
A× ( (1+r) - 1) / r)
A- 2,640, r = 10%
FV = 2,640 ×( ( 1.1^(15) - 1)/0.15 )
= 2,640 × 31.77248
= $83,879.35
Step 2
Determine the future of an annuity due
FV annuity due = 83,879.35×
FV = 83,879.35 × 1.1
= $92,267
Future value = $92,267
