Question

Find the future values of these ordinary annuities. Compounding occurs once a year. Do not round intermediate calculations. Round your answers to the nearest cent. $900 per year for 12 years at 16%.   $450 per year for 6 years at 8%. $800 per year for 10 years at 0%. Rework parts a, b, and c assuming they are annuities due. Future value of $900 per year for 12 years at 16% Future value of $450 per year for 6 years at 8%     Future value of $800 per year for 10 years at 0%

Answer 1

Future value of annuity = cash flows((1+rate)ⁿ -1)/rate

a	Future value of annuity	=	$900*((1+0.16)^12-1)/0.16
		=	$        27,765
b	Future value of annuity	=	$450((1+0.08)^6 -1)/0.08
		=	$          3,301
c	Future value of annuity	=	$800*10
		=	$          8,000

Future value of annuity due = cash flows(1+r)((1+rate)ⁿ -1)/rate

a	Future value of annuity due	=	$900*(1.16)*((1+0.16)^12-1)/0.16
		=	$        32,208
b	Future value of annuity due	=	$450*(1.08)*((1+0.08)^6 -1)/0.08
		=	$          3,565
c	Future value of annuity due	=	$800*10
		=	$          8,000