Question

Problem 5-8 Calculating Annuity Values [LO 1]

For each of the following annuities, calculate the future value. (Enter rounded answers as directed,

but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

Future Value				Annual Payment			Interest Rate				Years
	$			$	1,500			8	%				10
	$				5,000			9					40
	$				3,200			6					9
	$				7,500			10					30

References

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Answer 1

Future Value			Annual Payment		Interest Rate		Years
	$ 21729.84		$	1,500	8	%	10
	$1689412			5,000	9	%	40
	$36772.21			3,200	6	%	9
	$1233705			7,500	10	%	30

FV = PV * [(1 + r)^N - 1 ] / r

1) FV = 1500 * [(1+0.08)¹⁰ - 1] / 0.08 = 21729.84

2) FV = 5000 * [(1+0.09)⁴⁰ -1] / 0.09 = 1689412

3) FV = 3200 * [(1+0.06)⁹ - 1 ] / 0.06 = 36772.21

4) FV = 7500 * [(1+0.10)³⁰ -1]/ 0.10 = 1233705