Question

If the future value of an ordinary. 6-year annuity is $8.500 and interest rates are 9.5 percent, what's the future value of the same annuity due? (Round your answer to 2 decimal places.) Future value

Answer 1

The variables given in the question are:

a) n = 6 year

b) future value = $8500

c) r(Interest rate) = 9.5

From the question it is given that the future value of an amount for 6 years annuity is $8500. Then the future value of this $ 8500 is

F.V = P.V(1+r)^n

Present Value (P.V) = $8500

r = 9.5% i.e. 9.5/100 = .095

n = 1, as the number of year for calculating the future value of $8500 is not given, hence it is assumed to be one year.

Hence the Future Value of $ 8500 for 9.5% interest at one year is

F.V = $8500(1+.095)^1

F.V = 9307.5

Hence the Future Value for $8500 @ 9.5% interest rate is $9307.5