Suppose a future value annuity account of $250,000 was acquired by making quarterly payments of $2,708.63 at 5.55% compounded quarterly for 15 years. How much interest was earned?

To calculate the amount of interest earned in an annuity, we can follow these steps:

1. **Calculate the Total Amount Paid**:
   - The total number of payments is determined by the number of quarters in 15 years, which is $15 \times 4 = 60$ quarters.
   - Multiply the quarterly payment by the number of payments to get the total amount paid into the annuity:
     \[
     \text{Total Amount Paid} = 2,708.63 \times 60 = 162,517.80
     \]

2. **Calculate the Interest Earned**:
   - The interest earned is the difference between the future value of the annuity and the total amount paid:
     \[
     \text{Interest Earned} = \text{Future Value} - \text{Total Amount Paid}
     \]
   - Substituting the given future value of $250,000 and the total amount paid:
     \[
     \text{Interest Earned} = 250,000 - 162,517.80 = 87,482.20
     \]

Thus, the interest earned on the annuity account is **$87,482.20**.

Would you like further details on the annuity formula used or how the future value is calculated?

Here are 5 follow-up questions:
1. How is the future value of an annuity calculated?
2. What is the significance of compounding in interest calculations?
3. Can the interest rate affect the total interest earned over time?
4. What is the difference between annuity due and ordinary annuity?
5. How would monthly payments affect the total interest earned in this scenario?

**Tip:** Always ensure you match the payment frequency with the compounding period for accurate calculations.

Learn how to calculate the interest earned on a future value annuity of $250,000, acquired through quarterly payments of $2,708.63 at a 5.55% interest rate compounded quarterly for 15 years. This problem involves annuities, compound interest, and time value of money, with a detailed step-by-step solution. Suitable for high school and college students.

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