Question

What is the accumulated sum of each of the following streams of ordinary annuity
payments?
a. $35 per half-year for three and a half years at 14% p.a. compounded half-
yearly.

b. $25 a year for three years compounded annually at 2%.

c. $500 a year for 10 years compounded annually at 5%

Answer 1

a) We are given the following information:

Semi-Annual payment	PMT	$             35.00
rate of interest	r	14.00%
number of years	n	3.5
Semi-Annual Compounding	T	2
Future value	FV	To be calculated

We need to solve the following equation to arrive at the required FV

So the FV is $302.89

b) We are given the following information:

Annual payment	PMT	$             25.00
rate of interest	r	2.00%
number of years	n	3
Future value	FV	$             76.51

We need to solve the following equation to arrive at the required FV

So the FV is $76.51

c) We are given the following information:

Annual payment	PMT	$           500.00
rate of interest	r	5.00%
number of years	n	10
Future value	FV	$       6,288.95

We need to solve the following equation to arrive at the required FV

So the FV is $6288.95