Question

For each of the following annuities, calculate the future value. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Future Value				Annual Payment			Years				Interest Rate
		$		$	1,430			10					6	%
					5,880			43					7
					3,430			9					4
					8,090			35					8

Answer 1

Here we have the annuity payment, the length of the annuity, and the interest rate. We want to calculate the annuity future value. Using the FVA equation:

FVA = C{[(1 + r)^t – 1] / r}

FVA = $1,430{[(1 + 0.06)¹⁰ – 1] / 0.06}

FVA = $18,848.54

FVA = C{[(1 + r)^t – 1] / r}

FVA = $5,880{[(1 + 0.07)⁴³ – 1] / 0.07}

FVA = $1,456,925.80

FVA = C{[(1 + r)^t – 1] / r}

FVA = $3,430{[(1 + 0.04)⁹ – 1] / 0.04}

FVA = $36,298.99

FVA = C{[(1 + r)^t – 1] / r}

FVA = $8,090{[(1 + 0.08)³⁵ – 1] / 0.08}

FVA = $1,394,042.94