Question

What's the future value of a 4%, 5-year ordinary annuity that pays $700 each year? If this was an annuity due, what would its future value be? Do not round intermediate calculations. Round your answers to the nearest cent.

Future Value of an Ordinary Annuity: $  

Future Value of an Annuity Due: $  

Answer 1

a). Calculating the Future value of 5- year ordinary annuity:-

Where, C= Periodic Payments = $700

r = Periodic Interest rate = 4%

n= no of periods = 5

Future Value = $3791.43

Future Value of an Ordinary Annuity: $ 3791.43

a). Calculating the Future value of 5- year Annuity Due:-

Where, C= Periodic Payments = $700

r = Periodic Interest rate = 4%

n= no of periods = 5

Future Value = $3,943.09

Future Value of an Annuity Due: $ 3,943.09