Question

**“How do you find the future value of an ordinary annuity
using the simple interest formula method?”**

Answer #1

**Future value of an
ordinary annuity can be calculate d by using the following
formula**

**Future value of an
ordinary annuity**

**FV = PMT [ (1 + r ) ^{n} –1 ] / r**

Where ;

FV = Future Value of an ordinary annuity at the end of the n’th period

PMT = The amount of annuity payment received or deposited at the end of each period

r = Interest rate for the period

n = Number of payments period

**The Following is a
example to understand the concept of Future Value of an Ordinary
Annuity**

Annual Deposit = $620 per year

Interest rate = 2.50%

Number of Period = 12 Years

Future Value of an ordinary Annuity = PMT x [{(1+ r)^{n}
- 1} / r ]

= $620 x [{(1.025)^{12} – 1} / 0.025]

= $620 x [0.344888 / 0.025]

= $620 x 13.79555

= $8,553.24

Find the future value of an ordinary annuity if payments are
made in the amount R and interest is compounded as given. Then
determine how much of this value is from contributions and how much
is from interest
R=9200, 6% interest compounded semiannually for 7 years.
The future value of the ordinary annuity is $____?
Round to the nearest cent as needed
The amount from contributions is $___? and the amount from
interest is $___?
Round to the nearest cent...

How do simple and compound interest differ?
What is the difference between an ordinary annuity and annuity
due?
Why is time value a relevant consideration in accounting?
What are some areas of accounting where time value comes into
play?

Find the accumulated value of an ordinary simple
annuity where you save $3,000 per year for 8 years at an
interest rate of 7% compounded annually.

An ordinary annuity has an interest rate of 10% and a future
value of 80.00. What would be the future value of this same
annuity, if it were an annuity due instead of a regular annuity?
The future value of this annuity due is $

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

Future Value: Ordinary Annuity versus Annuity
Due
What is the future value of a 7%, 5-year ordinary annuity that
pays $650 each year? Do not round intermediate calculations. Round
your answer to the nearest cent.
$
If this were an annuity due, what would its future value be? Do
not round intermediate calculations. Round your answer to the
nearest cent.
$

Find the future value of an ordinary annuity of $4,000 paid
quarterly for 6 years, if the interest rate is 7%, compounded
quarterly. (Round your answer to the nearest cent.)

Find the future value of an ordinary annuity of $1,000 paid
quarterly for 9 years, if the interest rate is 9%, compounded
quarterly. (Round your answer to the nearest cent.)

Find the future value of an ordinary annuity of $7,000 paid
quarterly for 4 years, if the interest rate is 8%, compounded
quarterly. (Round your answer to the nearest cent.)

Find the future value of an ordinary annuity of $3,000 paid
quarterly for 9 years, if the interest rate is 7%, compounded
quarterly. (Round your answer to the nearest cent.)

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