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A two-year investment requires monthly deposits of $110 at the beginning of each month. The deposits...

A two-year investment requires monthly deposits of $110 at the beginning of each month. The deposits earn 6% per year. Calculate the investment’s future value.

What is the present value of an annuity of $456 to be received at the end of each year for three years discounted at 10.2% APR?

Calculate the present value of $400 to be received at the beginning of each year for four years if the discount rate is 11%. Remember, the payments will be received at the beginning of each year (annuity due).


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Answer #1

A two-year investment requires monthly deposits of $110 at the beginning of each month. The deposits earn 6% per year.

PV of Annuity Due = $2,494.32

Present value of an annuity of $456 to be received at the end of each year for three years discounted at 10.2% APR

PV of Annuity = 456/(1.102) + 456(1.102)2 + 456(1.102)3

PV of Annuity = 413.79 + 375.49 + 340.73

PV of Annuity = $1,130.01

Present value of $400 to be received at the beginning of each year for four years if the discount rate is 11%

PV of Annuity Due = $1,377.49

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