Question

Calculate the future value of the following annuity streams:

a.	$5,000 received each year for 5 years on the last day of each year if your investments pay 7 percent compounded annually. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Future value

$

b.	$5,000 received each quarter for 5 years on the last day of each quarter if your investments pay 7 percent compounded quarterly. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Future value

$

c.	$5,000 received each year for 5 years on the first day of each year if your investments pay 7 percent compounded annually. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Future value

$

d.	$5,000 received each quarter for 5 years on the first day of each quarter if your investments pay 7 percent compounded quarterly. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Future value

$

PLEASE SHOW THE WORK , I ALREADY POSTED THIS QUESTION AND THE ANSWERS WERE FALSE.

Answer 1

Requirement (a)

Annual Payments = $5,000 per year

Interest Rate (r) = 7%

Number of Years = 5 Years

Future Value of Ordinary Annuity = P x [{(1+ r) ⁿ - 1} / r ]

= $5,000 x [{(1 + 0.07)⁵ – 1} / 0.07]

= $5,000 x [(1.402551 – 1) / 0.0]

= $5,000 x [0.402551 / 0.07]

= $5,000 x 5.75073

= $28,753.70

Requirement (b)

Quarterly Payments = $5,000

Interest Rate (r) = 1.75% [7% / 4]

Number of Years = 20 Years

Future Value of Ordinary Annuity = P x [{(1+ r) ⁿ - 1} / r ]

= $5,000 x [{(1 + 0.0175)²⁰ – 1} / 0.0175]

= $5,000 x [(1.414778 – 1) / 0.0175]

= $5,000 x [0.414778 / 0.0175]

= $5,000 x 23.70161

= $1,18,508.06

Requirement (c)

Annual Payments = $5,000 per year

Interest Rate (r) = 7%

Number of Years = 5 Years

Future Value of Annuity Due = (1 + r) x P x [{(1+ r) ⁿ - 1} / r ]

= (1 + 0.07) x $5,000 x [{(1 + 0.07)⁵ – 1} / 0.07]

= 1.07 x $5,000 x [(1.402551 – 1) / 0.0]

= 1.07 x $5,000 x [0.402551 / 0.07]

= 1.07 x $5,000 x 5.75073

= $30,766.45

Requirement (d)

Quarterly Payments = $5,000

Interest Rate (r) = 1.75% [7% / 4]

Number of Years = 20 Years

Future Value of Annuity Due = (1 + r) x P x [{(1+ r) ⁿ - 1} / r ]

= (1 + 0.0175) x $5,000 x [{(1 + 0.0175)²⁰ – 1} / 0.0175]

= 1.0175 x $5,000 x [(1.414778 – 1) / 0.0175]

= 1.0175 x $5,000 x [0.414778 / 0.0175]

= 1.0175 x $5,000 x 23.70161

= $1,20,581.95