FUTURE VALUE OF AN ANNUITY
Find the future values of these ordinary annuities. Compounding occurs once a year. Round your answers to the nearest cent.
$700 per year for 8 years at 12%.
$
$350 per year for 4 years at 6%.
$
$700 per year for 10 years at 0%.
$
Rework previous parts assuming that they are annuities due. Round your answers to the nearest cent.
$700 per year for 8 years at 12%.
$
$350 per year for 4 years at 6%.
$
$700 per year for 10 years at 0%.
Future value of annuity = payment per period * [(1+i)^n-1]/i
i = interest rate per period
n = number of periods
a)
future value = 700 * [(1+0.12)^8 - 1]/0.12
= 8609.79
b)
future value = 350 * [(1+0.06)^4 - 1]/0.06
= 1531.12
c)
future value = 700 * 10 = 7000
Future value of annuity due= payment per period * [(1+i)^n-1]/i *(1+i)
i = interest rate per period
n = number of periods
d)
future value = 700 * [(1+0.12)^8 - 1]/0.12 * (1+0.12)
= 9642.96
e)
future value = 350 * [(1+0.06)^4 - 1]/0.06 * (1+0.06)
= 1622.98
f)
future value = 700 * 10 = 7000
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