What is the future value of $2,875 per year for 22 years at an interest rate of 6.93 percent?

Multiple Choice

$133,816.56

$139,687.38

$133,614.02

$134,870.57

$127,945.74

To calculate the future value of an annual payment, we use the formula for the future value of an annuity:

\[
FV = P \times \left(\frac{(1 + r)^n - 1}{r}\right)
\]

Where:
- $ FV $ is the future value.
- $ P $ is the annual payment ($2,875).
- $ r $ is the interest rate per period (6.93% or 0.0693).
- $ n $ is the number of periods (22 years).

Let's plug in the values and compute the future value.The future value of $2,875 per year for 22 years at an interest rate of 6.93% is approximately **$139,687.38**.

Thus, the correct multiple choice answer is:

**$139,687.38**

Do you want more details on this calculation or have any questions?

Here are 5 related questions to explore:
1. What is the present value of a similar annuity?
2. How would the future value change with a different interest rate?
3. What happens if payments are made semi-annually instead of annually?
4. How do you calculate the future value of a growing annuity?
5. What is the difference between future value of an ordinary annuity and an annuity due?

**Tip:** The future value of an annuity depends greatly on both the interest rate and the number of periods; small changes in either can have a large impact on the final value.

What is the future value of $2,875 per year for 22 years at an interest rate of 6.93 percent?

Learn how to calculate the future value of an annuity with $2,875 annual payments over 22 years at an interest rate of 6.93%. This problem demonstrates key financial concepts such as future value, compound interest, and annuity calculations. Suitable for advanced high school or college students.

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