Question

Find the future values of these ordinary annuities. Compounding occurs once a year. Do not round intermediate calculations. Round your answers to the nearest cent. $900 per year for 16 years at 4%. $ $450 per year for 8 years at 2%. $ $300 per year for 8 years at 0%. $ Rework parts a, b, and c assuming they are annuities due. Future value of $900 per year for 16 years at 4%: $ Future value of $450 per year for 8 years at 2%: $ Future value of $300 per year for 8 years at 0%: $

Answer 1

Answer:

Ordinary annuities:

$19,642.08  

$3,862.34  

$2400

Annuities due:

$20,427.76

$3,939.58

$2400

Explanation:

The future values of the annuities can be computed using excel future value formula:

=fv(rate,nper,-pmt,pv,type)

rate is the interest rate

nper is the period of investment stated in years

pmt is the regular investment amount

pv is present worth of each investment which is unknown and taken as zero

type could either be 0 or 1

1 is for annuity due

0 is for ordinary annuity

Ordinary annuities:

$900 per year for 16 years at 4%

=fv(4%,16,-900,0,0)=$19,642.08  

$450 per year for 8 years at 2%

=fv(2%,8,-450,0,0)=$3,862.34  

$300 per year for 8 years at 0%

=fv(0%,8,-300,0,0)=$2400

annuities due:

$900 per year for 16 years at 4%

=fv(4%,16,-900,0,1)=$20,427.76  

$450 per year for 8 years at 2%

=fv(2%,8,-450,0,1)=$3,939.58  

$300 per year for 8 years at 0%

=fv(0%,8,-300,0,1)=$2400