Question

# a. Find the future value of the ordinary annuity. (Round your answer to the nearest cent.)...

a. Find the future value of the ordinary annuity. (Round your answer to the nearest cent.) \$120 monthly payment, 5.5% interest, 1 year

b. Find the future value (FV) of the annuity due. (Round your answer to the nearest cent.) \$170 monthly payment, 6% interest, 14 years

#### Homework Answers

Answer #1

Answer a)

Future Value =

where r is the rate of Return for compounding period = 5.5% /12 = 0.45833333333%

n is the no of compounding period 12 months

=

= 120 * 12.3071695267

= \$1,476.86

Answer b)

Future Value =

where r is the rate of Return for compounding period = 6% /12 = 0.5%

n is the no of compounding period 14 years *12 months = 168 months

=

=

= 170 * 263.616289894

= \$ 44,814.77

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