Question

(1 point) An annuity-immediate makes payments of 200 per year payable quarterly for 8 years at an effective annual interest rate i = 3%. The accumulated value of this annuity is AV =

Answer 1

PV Annuity Due C Cx[1-(1+i)^(-n)]*(1+i)/i $200.00 N 3% PV Annuity Due $1,446.06 FV Annuity Due FV Annuity Due Cx[(1+i)^n-1]+(1+i)/i $8,698.49

In the First part as we are getting payment at the start of the year we will calculate annuity due

Here both present as well as future values are calculate

the answer here would be present value

Payment Made 9 Years 9 Present Value 1041.055 Payment Made 18 Years 18 Present Value 637.5267 Payment Made 27 Years 1700 1700 1700 1700 1700 27 Present Value 390.412 Payment Made 36 Years 36 Present Value 239.0825 Payment Made 45 Years 45 Present Value 146.4106 Payment Made 54 Years 1700 54 Present Value 89.65971 Payment Made 63 Years 63 Present Value 54.90629 Payment Made 72 Years 1700 1700 1700 72 Present Value 33.6238 Payment Made 81 Years 81 Present Value 20.59072 Present Value of Annutiy 2653.267

In this the present value of each payment is calculated and then the sum of all the present values is the PV of Annuity