Question

O CONSUMER MATHEMATICS Annuity due Bob Adams invested $7000 four times a year in an annulty due at All-Star Investments for a period of 2 years at an interest rate of 12% compounded quarterly Using the ordinary annuity table, calculate the total value of the annuity due at the end of the 2-year period x 5 ?

Answer 1

FV of Annuity Due = FV of Ordinary Annuity * (1 + r)

FV of Ordinary Annuity = Periodic Payment * FVIFA(r%,n)

= $7,000 * FVIFA[(12%/4),(2*4)]

= $7,000 * FVIFA[3%,8]

= $7,000 * 8.8923

= $62,246.10

FV of Annuity Due = $62,246.10 * [1 + (0.12/4)]

= $62,246.10 * 1.03 = $64,113.48