Question

You deposit $4,000 at the end of each year into an ordinary annuity with an interest rate of 5% compounded annually. What will be the value of the annuity after 10 years? Do not round until the final answer; then round to the nearest dollar as needed.

Answer 1

The formula for calculating an annuity is:
Total = Yrly Amt *([(1+r)^(n+1) -1] / r) - Yrly Amt

Total = $4,000.00 * ([(1+.05)^11]-1 / .05) - $4,000.00
Total = $4,000.00 * (.7103393581 / .05) - $4,000.00
Total = ($4,000.00 * 14.206787162) - 4,000.00
Total = 56,827.15 - 4,000.00
Total = 52,827.15

Calculator to check the work:
http://www.1728.org/annuity.htm

Answer 2

Oh and rounded to the nearest dollar it is:
$52,827