Calculate the future value of an annuity, with case A being an ordinary annuity and case...

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Calculate the future value of an annuity, with case A being an ordinary annuity and case...

Calculate the future value of an annuity, with case A being an ordinary annuity and case B being an annuity due.

Case

Annuity

Interest

Rate (%)

Deposit

Period (Yrs)

Future

Value ($)

A

18,000

4

B

9,000

10

6

What is the future value of A and B case (round to the nearest cent )

business finance

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Answer 1

Answer #1

A:

Future value of annuity=Annuity[(1+rate)^time period-1]/rate

=$18,000[(1.04)^4-1]/0.04

=$18,000*4.246464

=$76436.35(Approx).

B:

Future value of annuity due=(1+rate)*Annuity[(1+rate)^time period-1]/rate

=1.1*9000[(1.1)^6-1]/0.1

=9000*8.487171

=$76384.54(Approx).

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Answer 2

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