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 10 years at 8%. $

$450 per year for 5 years at 4%. $

$1,000 per year for 5 years at 0%. $

Rework parts a, b, and c assuming they are annuities due.

Future value of $900 per year for 10 years at 8%: $

Future value of $450 per year for 5 years at 4%: $

Future value of $1,000 per year for 5 years at 0%: $

Answer 1

FVOrdinary Annuity = C*(((1 + i )^n -1)/i)

C = Cash flow per period

i = interest rate

n = number of payments

FV= 900*(((1+ 8/100)^10-1)/(8/100))

FV = 13037.91

FVOrdinary Annuity = C*(((1 + i )^n -1)/i)

C = Cash flow per period

i = interest rate

n = number of payments

FV= 450*(((1+ 4/100)^5-1)/(4/100))

FV = 2437.35

FVOrdinary Annuity = C*(((1 + i )^n -1)/i)

C = Cash flow per period

i = interest rate

n = number of payments

FV= 1000*(((1+ 0/100)^5-1)/(0/100))

=5000

FVAnnuity Due = c*(((1+ i)^n - 1)/i)*(1 + i )

C = Cash flow per period

i = interest rate

n = number of payments

FV= 900*(((1+ 8/100)^10-1)/(8/100))*(1+8/100)

FV = 14080.94

FVAnnuity Due = c*(((1+ i)^n - 1)/i)*(1 + i )

C = Cash flow per period

i = interest rate

n = number of payments

FV= 450*(((1+ 4/100)^5-1)/(4/100))*(1+4/100)

FV = 2534.84

FVAnnuity Due = c*(((1+ i)^n - 1)/i)*(1 + i )

C = Cash flow per period

i = interest rate

n = number of payments

FV= 1000*(((1+ 0/100)^5-1)/(0/100))*(1+0/100)

=5000